Euro, Aussie Gain ahead of ECB’s LTRO

By: Barbara Zigah

The Euro edged higher in Asian trading, accompanied by other commodity-linked currencies as investors have pinned their collective hopes on today’s LTRO offering from the European Central Bank. Like the previous offering which saw participation of nearly €500 billion, Eurozone banks are being offered 3-year loans from the ECB at exceptionally low interest rates. A recent consensus of economists polled suggests that participation this time is expected to at least equal the previous offering though earlier estimates suggested it could be double that or more.

As reported at 11:47 a.m. (JST) in Tokyo, the Euro was trading at $1.3476 against the U.S. Dollar, a gain of 0.1% in overnight trading and a 0.5% increase from Tuesday trading. It remains close to the 2½ month high which was struck last week, and with a rise during today’s trading day could close the month 3% higher. The Australian Dollar also gained against the U.S. Dollar, edging 0.4% higher and approaching the 6-month peak of $1.0845 which was struck earlier in the month.

The Japanese Yen continues to be weak and is expected to post the largest single month’s decline in 11 years against the Euro, and 2 years versus the U.S. Dollar. The U.S. Dollar gained 0.2% against the Japanese Yen to trade at 80.59 Japanese Yen, while the Euro rose 0.3% to trade at 108.61 Japanese Yen.