Monday, October 22 09:27:18
The euro edged higher today, helped by a victory in regional elections for Spain's prime minister while the yen hit a three-month low against the dollar on expectations for more economic stimulus from the Bank of Japan. The euro was up 0.1 percent at $1.3032 from a low of $1.3013 hit on Friday, with chart support above $1.30. Traders reported talk of a large $1.3050 options expiry that could keep the euro pinned close to that level. The single currency was helped as Spanish Prime Minister Mariano Rajoy's People's Party secured victory in his home region of Galicia, boosting his austerity drive. The election had been seen by some as a referendum on the government's handling of the euro zone crisis.
"A lack of negative news out of Europe should help the euro for the moment at least," said Richard Falkenhall, currency strategist at SEB in Stockholm. He said the euro could rise to $1.34 or $1.35 over the coming weeks, adding the U.S. presidential election and the looming 'fiscal cliff' could switch the market's attention towards the United States and away from the euro zone. Expectations that Spain will apply for a bailout, prompting the European Central Bank to start buying its bonds, kept the euro supported although uncertainty over the timing of such a move was also seen limiting its gains. The euro fell late last week from a one-month peak of $1.3140 after Spain made no moves to seek help at a European Union summit. It faces chart resistance at the September high of $1.31729 on the EBS trading platform.
The yen fell broadly after data showing Japan's exports tumbled in September added to growing expectations of more policy stimulus from the Bank of Japan when it meets next week. The dollar rose around 0.4 percent to 79.68 yen, its strongest since mid-July, gaining momentum after breaching resistance at its 200-day moving average around 76.42 yen. The euro was up 0.6 percent at 103.88 yen, nearing a five-month peak of 104.145 hit last week. "There is a lot of hope there that they (the BOJ) will do something big. History is sadly a poor lead and it would be prudent to pare down these long USDJPY positions early and maintain a strategy of buying on dips," said Sebastien Galy, strategist at Societe Generale. ( C) Reuters