NEW YORK, Dec 30 (Reuters) - The euro rose broadly on
Monday, as euro zone banks repatriated foreign-held assets
before year-end and after the European Central Bank chief said
there was no urgent need to cut interest rates.
The euro's strength this year has baffled many commentators
and investors, who had expected tough economic conditions in
some member states to weigh on the single currency.
But the euro has been boosted as banks in the region
repatriate funds ahead of the year-end to shore up their capital
bases before an ECB Asset Quality Review and as banks repay
cheap crisis loans to the ECB, which results in tighter
In addition, ECB President Mario Draghi said in an interview
with German news magazine Spiegel published on Saturday that he
sees no urgent need to cut the euro zone's main interest rate
further and no signs of deflation.
'The comments were supportive of the euro in otherwise
eventless trading activity. Capital flows and elevated money
market rates continue to support the euro as well,' said Omer
Esiner, chief market analyst at Commonwealth Foreign Exchange in
The euro was up 0.4 percent against the dollar at
$1.3797, having shot up as high as $1.3892 in thin year-end
trade on Friday, its highest level since October 2011. It has
risen more than 4 percent against the dollar in 2013 and is set
for a second straight year of gains.
The euro was up 0.4 percent against the yen at
144.98 yen, having hit a five-year high of 145.675 yen on
Friday, with the Japanese currency weighed down by expectations
the Bank of Japan will announce more money printing.
Many commentators think the euro could weaken early in 2014
once the Asset Quality Review is out of the way.
'We remain skeptical of euro strength and will be watching
funding rates in the first days of the new year for signs that
the liquidity squeeze which supported the euro mid-December is
continuing to fade,' BNP Paribas analysts said in a note.
The euro was down 1.2 percent against the Swedish crown at
8.8496 crowns after November retail sales in Sweden rose more
The dollar hit 105.415 yen, its highest level since
October 2008, in Asian trading but gave back gains to trade down
0.1 percent on the day at 105.08 yen.
The yen has been the weakest major currency this year,
weighed down by the BOJ's pledge to keep interest rates low.
The dollar has gained 21 percent against the Japanese
currency while the euro, the strongest major currency in 2013,
has risen 26 percent.
Morgan Stanley's head of global currency strategy, Hans
Redeker, cited the Bank of Japan's plans to increase its balance
sheet and Japanese investors buying euro zone government bonds
as weighing on the yen.
But he added: 'It's a very thin marketplace, so it only
needs a bit of liquidity to take the market into some type of
significant price action.'
(Reporting by Laurence Fletcher in London and Wanfeng Zhou in
New York; Editing by Chizu Nomiyama, Meredith Mazzilli and
((Wanfeng.Zhou@thomsonreuters.com)(+1 646 223 6304)(Reuters
Keywords: MARKETS FOREX
(Currency bid prices at 3:51 p.m. EST (2051 GMT). All data taken from Reuters calculated from the levels at 4:30 p.m.(2130 GMT) in the previous New York session. Last US Close Pct YTD Pct 2012 Dec. 27 Change Change Close ------------------------------------------------------------- Euro/dlr 1.3797 1.3741 +0.41 +4.57 1.3194 Dlr/yen 105.09 105.15 -0.06 +21.16 86.740 Euro/yen 144.98 144.45 +0.37 +26.68 114.45 Dlr/swiss 0.8877 0.8913 -0.40 -3.04 0.9155 Stg/dlr 1.6505 1.6478 +0.16 +1.56 1.6251 Dlr/cad 1.0638 1.0703 -0.61 +7.23 0.9921 Aus/dlr 0.8908 0.8868 +0.45 -14.29 1.0393 Euro/swiss 1.2246 1.2248 -0.02 +1.42 1.2075 Euro/stg 0.8359 0.8335 +0.29 +3.02 0.8114 Nzd/dlr 0.8199 0.8145 +0.66 -1.01 0.8283 Dlr/Norw 6.0700 6.1431 -1.19 +9.09 5.5630 Euro/Norw 8.3820 8.4455 -0.75 +14.19 7.3)
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