Tradervox.com (Dubliln) – The 17-nation currency strengthened against the Japanese currency to 8-month high after the European Union leaders promised to seek joint strategy for dealing with failing banks. The move boosted the demand for the euro assets in the market. The single currency is headed for a weekly gain against the dollar as reports have indicated that EU leaders have agreed to commence work on a single resolve mechanism for the euro-region banks to help the European Central Bank supervisory role approved in their meeting yesterday. The yen was at its lowest level against the dollar since March after reports showed that business confidence in Japan slid to the lowest in three years. This has increased pressure on the Bank of Japan, to embark on more easing.
According to Audrey Childe-Freeman, who is a currency strategist in London at Bank of Montreal, the euro has advanced amidst positive news from the region’s leaders. He added that the yen has continued to weaken as we head closer to the election which is set to change the monetary policy in the coming year. Speculation and the not-so-good reports from Japan have also added to the currency’s decline this month. According to reports from the EU leaders meeting, they have urged the region’s banks to underwrite financial stability by repaying governments as required. Angela Merkel, the German Chancellor indicated that the resolution will not cost taxpayers, insisting that those responsible for the failures will shoulder the burden.
The 17-nation currency increased by 0.2 percent against the yen to trade at 109.58 at the start of trading in London, after climbing as high as 109.98, which is the highest it has been since April 2. The yen dropped by 0.2 percent against the greenback to trade at 83.78 yen per dollar. It had earlier dropped to 83.96, the lowest level since March 21.
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