Euro ends day little changed in quiet summer trading
Despite falling to session lows after comments from ECB and Bundesbank's criticism of the ECB's operations, euro recovered intra-day losses in New York session on short-covering.
Although the single currency opened higher and climbed to 1.2354 in New Zealand morning after Germany's weekly Spiegel magazine reported on Sunday that ECB may set interest rates thresholds for any purchases of struggling euro zone country's bonds, price pared gains and retreated to 1.2321 in Asian morning. Euro briefly rose to an intra-day high at 1.2368 in early European morning, however, the single currency came under selling pressure after a German Finance Ministry spokesman said they were not aware of any plans by the ECB to target bond spreads.
Price dropped further to session low at 1.2296 in early New York morning after ECB brushed aside Spiegel's report and as Germany's Bundesbank stepped up criticism of the European Central Bank's plan for government-bond purchases, widening a rift over how to tackle the sovereign-debt crisis. Later, euro recovered intra-day losses and rebounded to 1.2352 in New York afternoon in summer trading conditions on short-covering before stabilising.
The ECB, commenting on Spiegel report, said that it is absolutely misleading to report on decisions which have not been taken. ECB added 'it will act strictly within its mandate; as far as statements by gov't officials are concerned, wrong to speculate on shape of future ECB interventions.' whilst Germany's Bundesbank said 'remains critical of ECB bond buying plan; ECB bond buying plan comes with considerable risks to stability; volume of bond purchases could be "unlimited" but shud be sufficient in any case; uncertainty in eurozone to hit German economy more in second half of yr; German economy will not go into reverse gear as long as demand for German products fm outside Europe remains solid; Germany shud not delay budget consolidation, trust in its state finances "not unshakeable".'
The British pound also ratcheted higher in New Zealand morning to 1.5709 before falling to an intra-day low at 1.5678 in Asian morning. Cable rebounded in tandem with euro and rose to session high at 1.5717 in European morning, however, price pared intra-day gains and retreated to 1.5682 on risk aversion. Later, price recovered to 1.5716 in New York morning before trading sideways.
In other news, Greek Foreign Minister Dimitris Avramopulos said 'Greece will present an 11.7bln euro reform package in several weeks to fulfill reform requirements.'
On the data front, Japan leading index rose to 94.1 from 93.8 previously.
Data to be released on Tuesday:
Australia RBA August minutes, Japan All industry index, U.K. PSNCR, PS net borrowing, CBI industrial trend, Canada Wholesale sales.