Euro Rises Versus Most Peers as Stress Tests Ease Bank Concern

Frankfurt (Oct 26)  The euro rose versus most of its major peers after the results of European Central Bank stress tests eased concern about the capitalization of the region’s lenders.

The single currency strengthened to a two-week high versus the yen before a report from the Ifo institute forecast to show business confidence stabilized in Germany, the currency bloc’s biggest economy. The dollar held its biggest weekly advance versus the yen in a month before the Oct. 28-29 meeting of the Federal Reserve, which is predicted to end its quantitative-easing strategy of bond buying.

“If the Ifo survey comes in as the market expects, worries about Germany will be scaled back, and the euro will rise,” said Toshiya Yamauchi, a senior analyst in Tokyo at Ueda Harlow Ltd., which provides margin-trading services. “The results of the stress tests have already relieved some concerns.”

The euro rose 0.1 percent to 137.19 yen at 8:47 a.m. in Tokyo from Oct. 24, after earlier touching 137.47, the most since Oct. 9. It added 0.1 percent to $1.2679. The dollar was little changed at 108.21 yen, after earlier reaching 108.38, the highest since Oct. 8.

New Zealand markets were closed for the Labour Day holiday.

The Ifo institute’s business climate index, based on a survey of 7,000 executives, was little changed at 104.5 in October, according to the median estimate of economists surveyed by Bloomberg News. The gauge was at 104.7 in September, after declining at least 1.5 percent for three straight months.

The ECB-led stress tests identified a total gap of 25 billion euros ($31.7 billion) as of the end of 2013, most of which has now been raised by banks. None of Europe’s largest banks were found lacking. No French, German or Spanish institutions were required to find more capital.

Source:  Bloomberg