The euro gained against the majority of its most-traded counterparts as the central bank saw signs of “stabilization” in the region and investors speculated Greece would convince European leaders to release its aid package.
The euro rose 0.3 percent to US$1.3197 and gained 1.63 percent to ￥102.43 versus the Japanese currency. The yen fell 1.32 percent per US dollar.
FUTURES TRADE
Futures traders decreased bets the euro would fall versus the dollar, lowering so-called net shorts for a second week. The difference between wagers that the shared currency will weaken versus those that it will rise narrowed to 140,593 on Tuesday, data from the Commodity Futures Trading Commission showed.
European Central Bank (ECB) President Mario Draghi said on Thursday it would lower the collateral requirements to access the next three-year loan auction later this month. He also said surveys confirm “signs of stabilization” in the region.
The ECB maintained policy makers’ main refinancing rate at 1 percent, in line with the estimates of 55 of 57 analysts in a Bloomberg News survey.
RALLY
The euro has rallied 4.3 percent versus the US dollar from the low last month of US$1.2624 amid speculation Greek lawmakers would satisfy demands from the European Commission, ECB and IMF to receive the 130 billion euro (US$172 billion) aid package. It is trading US$0.11 above its lifetime average of US$1.2060.
The euro gained 0.1 percent to 1.20959 versus the Swiss franc. It breached the 1.21 mark on Tuesday for the first time since Jan. 25. Swiss central bank interim chairman Thomas Jordan said the currency remains “very strong” and policy makers can’t allow it to appreciate further. The Swiss National Bank imposed a 1.20 cap on the currency on Sept. 19.
The New Taiwan dollar is on the verge of overtaking the yuan as Asia’s best carry-trade target given its lower risk of interest-rate and currency volatility. A strategy of borrowing the New Taiwan dollar to invest in higher-yielding alternatives has generated the second-highest return over the past month among Asian currencies behind the yuan, based on the Sharpe ratio that measures risk-adjusted relative returns. The New Taiwan dollar may soon replace its Chinese peer as the region’s favored carry trade tool, analysts say, citing Beijing’s efforts to support the yuan that can create wild swings in borrowing costs. In contrast,
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VERTICAL INTEGRATION: The US fabless company’s acquisition of the data center manufacturer would not affect market competition, the Fair Trade Commission said The Fair Trade Commission has approved Advanced Micro Devices Inc’s (AMD) bid to fully acquire ZT International Group Inc for US$4.9 billion, saying it would not hamper market competition. As AMD is a fabless company that designs central processing units (CPUs) used in consumer electronics and servers, while ZT is a data center manufacturer, the vertical integration would not affect market competition, the commission said in a statement yesterday. ZT counts hyperscalers such as Microsoft Corp, Amazon.com Inc and Google among its major clients and plays a minor role in deciding the specifications of data centers, given the strong bargaining power of
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