Euro Weakens Versus Peers Before Confidence, Jobless Data

Euro Weakens Versus Peers Before Confidence, Jobless Data

“Even if the ECB were to come up with some policy measures, it will take a considerable amount of time for them to take effect,” said Masakazu Sato, a foreign-exchange adviser for Gaitame Online Co. in Tokyo. “Economic data in the meantime will remain very weak and the euro will continue to be sold each time such data comes out.”
The euro dropped 0.2 percent to $1.2294 as of 6:39 a.m. in London, trimming last week’s 1.4 percent rally. The common currency slid 0.4 percent 96.32 yen after touching a two-week high of 97.34 on July 27. The dollar bought 78.35 yen from 78.46 last week.
Today’s report from the European Commission in Brussels will probably confirm its index of household sentiment in the euro area declined to an almost three-year low of minus 21.6 in July, according to economists in a Bloomberg News survey.

The jobless rate in the area probably rose to 11.2 percent in June from an all-time high of 11.1 percent in May, economists in a separate poll predicted before the statistics office releases data tomorrow.
Draghi Plan
Draghi sparked a euro rally last week by pledging to do whatever it takes to preserve the currency, suggesting policy makers may intervene in bond markets.
His proposal involves the European Financial Stability Facility buying government bonds on the primary market, buttressed by ECB purchases on the secondary market to ensure transmission of its record-low interest rates, two central bank officials said July 27 on condition of anonymity. Further ECB rate cuts and long-term loans to banks are also up for discussion, one of the officials said.
While the ECB’s commitment to preserve the euro is necessary, it’s not sufficient by itself to resolve the debt crisis, Moody’s said in its Credit Outlook today.


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