Euro exchange rate today: EUR supported as short positions are unwound, but equity indices are deep in the red

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Published on Wednesday, 22 August 2012 08:57

Written by Rob Samson

International Money Transfers at our sister site

Latest news and review of the single currency which is doing a good job of holding onto yesterday's gains.

The euro (Currency:EUR) is doing a pretty good job of holding onto, and in many cases extending, yesterday's gains. This despite a sharply lower equity environment - the FTSE 100 is a percentage point in the red.

The euro dollar exchange rate is 0.03 pct up on Tuesday night's closing level at 1.2477.

The euro pound exchange rate is 0.1 pct in the red at 0.7894.

The euro Australian dollar rate is 0.32 pct higher at 1.1929.


"Weaker equity markets across the board in Asia due to disappointing trade data out of Japan and renewed concerns about sharply falling corporate profits in China is also taking a toll on European equity markets this morning with most major indices handing back yesterday’s gains putting them firmly back into the old trading ranges seen during past few days," says Markus Huber at ETX Capital, commenting on the poor risk environment.

But, Spanish borrowing costs are close to falling back below 6 pct this morning suggesting that today's broader market falls are not Eurozone-specific.

Less than a month ago, borrowing costs hit 7.75 pct.

KBC Markets have suggested that there remain technical factors behind the euro's strength. In a morning currency note to clients the KBC research team lead by Piet Lammens say:

"Looking at yesterday’s price action, the impression is that the market has still some unwinding of euro short/dollar long positions to do."

Ahead today the spotlight will remain on Greece, with traders eagerly awaiting Greek Prime Minister’s visit to Germany and France later in the week trying to renegotiate some of the agreed bailout terms.

In the US later, housing data is scheduled for release with traders expecting a rebound after last month’s decline, main focus however will be on the minutes of the FOMC meeting providing traders with a latest update on just how willing Fed members are to act should the economy be in need of further stimulus.