Euro holds firm as appetite for risk increases

Published: 6 Mar at 9 AM Tags: Euro, Dollar,

The prospect of further monetary easing by the Bank of Japan, Bank of England and European Central Bank along with a commitment by the US Federal Reserve to a programme of bond buying has helped to hold up commodity currencies and the euro. The single currency has also been helped by the record-closing high hit by the Dow Jones Industrial Average which was led by an improved appetite for risk.

The euro settled at $1.3067, an increase of 0.1 per cent, and sterling was also slightly up to $1.5416. Both currencies hit a trough at the end of last week. The single currency has also been buoyed by the indication that Italian President Giorgio Napolitano may be looking to appoint a technocrat government as a way of ending the country’s political stalemate.

Investors have been given the confidence to look towards riskier assets as the US indicates that its economy is continuing to strengthen and China announces plans for heavy government spending as a way of boosting growth.

A policy-setting meeting is due to begin at the Bank of Japan. However, nothing too drastic is expected in terms of aggressive deflation defeating proposals until a new governor is appointed. The yen is currently trading at 93.16 per dollar, a gain of 0.2 per cent.

The rising appetite for risk also pushed the Aussie dollar to $1.0283, a gain of 0.25 per cent.