FX round-up: Euro firms as Spain denies bailout move

Date: Wednesday 03 Oct 2012

The euro retained gains against the dollar on Tuesday as Spain quashed reports that it is moving closer to asking for a bailout.

The ICE dollar index, which measures the US currency against a basket of six others, fell to a low of 79.478 before gaining ground to around 79.736 compared to 79.795 on Monday.

The euro bought $1.2922 from $1.2895 the previous day as markets digested reports that the Eurozone's fourth-largest economy was getting ready to ask for a bailout as early as this weekend. However Spain's Prime Minister Mariano Rajoy was quick to quash the reports saying a bailout request was not imminent.

A bailout for Spain is widely seen as positive as it will lower borrowing costs and remove persistent uncertainty about the nation's debt situation.

Also in focus was a review of Spain’s credit rating later this month by Moody’s Investors Service. Many analysts believe the country will be downgraded to junk status.

The Australian dollar changed hands at $1.0369 ahead of the central bank's surprise rate cut compared to $1.0371 on Monday.

Against the yen, the greenback bought ¥78.14 from ¥78.02 on Monday while sterling lost earlier momentum to trade at $1.6146 compared to $1.6134 before.



CJ

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