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Euro Mixed Against Majors

4/25/2012 7:22 AM ET

The euro was mixed against its major rivals in early deals on Wednesday. While the common currency edged higher against the dollar and the pound, it held steady against the Swiss franc and the yen.

European stocks rose for a second consecutive session as forecast-beating corporate earnings soothed growing worries about France and the Netherlands.

The benchmark German DAX is currently up 77 points or 1.17 percent at 6,665, while France's CAC 40 is climbing 1.7 percent and the U.K.'s FTSE 100 is moving up 0.22 percent.

The European Central Bank President Mario Draghi said that the ECB expects banks to use its liquidity injection of EUR 520 billion to refinance the real economy.

At the same time, Germany raised EUR 2.405 billion from the sale of its new 30-year bond, data from the Bundesbank showed today. The auction of the 2.50 percent July 2044 bond attracted bids totaling EUR 2.747 billion, which was less than the EUR 3 billion target set for the sale.

The common currency advanced to a 1-week high of 0.8224 against the pound, having reversed from yesterday's pivotal demand zone at a 20-month low of 0.8145/50. The next resistance area for the pair is seen around the 0.8250 level.

The pound gapped lower as the U.K. economy unexpectedly contracted for the second straight time in the first quarter.

The Office for National Statistics said in a report that the U.K. gross domestic product dropped 0.2 percent sequentially, while economists were forecasting a 0.1 percent expansion. That follows a 0.3 percent drop in the fourth quarter of 2011.

On a yearly basis, GDP remained flat in the first quarter. Economists had expected an annual 0.3 percent growth.

Against the US dollar, the single currency jumped to a 3-week high of 1.3237 and its next likely resistance is seen around the 1.3320 level.

However, the gains were capped as the market await tonight's FOMC rate decision. The outcome of two-day Federal Reserve policy meeting is expected to provide clues on the prospects of a new round of quantitative easing to bolster U.S. economic growth.

The euro moved in broad-ranges against the yen, after having posted solid gains in early Asian deals and a subsequent retreat in late trading. The euro is presently worth 107.43 against the yen, off its early Asian session's 2-day high of 107.68.

The Japanese yen fell in the morning on speculation that the Bank of Japan would announce further asset-buying measures next week.

Against the Swiss franc, the European common currency traded in its recent ranges, barely moved off its 1.2016-21 range. The pair reached its 1.20 peg earlier this month and recovered just 35-pips since then.

Looking ahead, the FOMC is due to release the post-meeting policy statement at 12:30 am ET followed by the release of the FOMC forecasts at 2 pm ET. Bernanke will address a press briefing at 2:15 pm ET.

Ahead of the FOMC announcement, the Commerce Department is set to release its durable goods orders report at 8:30 am ET. Economists expect a 1.5 percent drop in durable goods orders for March.

by RTT Staff Writer

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