Euro rebounds on Friday as ECB loosens lending rules to ease funding stress
Euro extended Thursday's selloff to session low of 1.2520 in European morning on Friday after the release of weaker-than-expected German Ifo business climate data which fell for a second successive month in June to its lowest in more than two years, however, the single currency rebounded to 1.2583 on short-covering in NY morning as Dominion Bond Rating Service (DBRS) said it maintained Spain sovereign rating at A (high) and kept rating under review together with the news that the ECB loosened lending rules to ease funding stress. ECB is to start accepting a wider range of collateral in its lending operations and also assets of a lower quality. The changes, which will be worth over 100 billion euros, marked the ECB's second such move in six months.
The single currency later weakened again to 1.2522 after Spanish policy makers considered forcing investors who hold equity and junior debt in banks to absorb losses in a restructuring, however, buying interest above European low of 1.2520 together with position adjustment ahead of the weekend lifted price and closed at 1.2574.
In other news, German Chancellor Angela Merkel Spain is responsible for its own banks and that direct bailout funding of banks violates treaties. She also agreed with leaders of France, Italy and Spain on a 130 billion euro ($156 billion) package to revive growth on Friday, but resisted pressure for common euro zone bonds or a more flexible use of Europe's rescue funds.
The greenback rose against the Japanese yen to a fresh 5-week high of 80.57 on active cross selling in jpy as Japanese lawmakers in the lower house prepared to vote on a bill to double sales tax.
European Union leaders are preparing to discuss the path to closer political and economic union at a summit in Brussels on June 28-29, G-20 leaders held their second straight summit dominated by the contagion from Europe.
Data to be released next week :
German Gfk consumer confidence, U.S. New home sales on Monday.
U.K. PSNCR on Tuesday.
German CPI prelim, HICP prelim, U.K. CBI distributive trades on Wednesday.
Japan retail sales, German unemployment rate, U.K. GDP, Eurozone business climate and consumer confidence, U.S. GDP, PCE core and jobless claims on Thursday.
U.K. Gfk survey, Japan PMI manufacturing, PMI manufacturing, Tokyo CPI, Industrial production, Swiss KOF indicator, eurozone HICP flash, U.S. PCE index, Canada GDP and PPI, U.S. Chicago PMI, University of Michigan survey on Friday.