Forexpros – The euro jumped to a two-week high against the yen on Wednesday, as risk assets rallied after six major world central banks announced coordinated measures prevent a lack of liquidity in the global financial system.
EUR/JPY hit 104.73 during European afternoon trade, the pair’s highest since November 15; the pair subsequently consolidated at 104.52, surging 0.76%.
The pair was likely to find support at 103.06, Monday’s low and resistance at 105.55, the high of November 15.
The Federal Reserve, the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank said in a joint statement that they had agreed to lower dollar swap rates, in coordinated action to enhance the capacity to provide liquidity to the global financial system.
The European Central Bank said the plan was aimed at reducing the credit-supply strain on households and businesses.
The surprise announcement came after the People’s Bank of China said that it plans to cut banks reserve requirement ratios by 0.5%, in an effort to help boost liquidity and support the world’s second largest economy amid global market turmoil.
The euro came under pressure earlier as finance ministers from the single currency bloc were preparing to meet for a second day of talks aimed at addressing the escalating debt crisis in the region, after agreeing on measures to expand the bloc’s bailout fund on Tuesday.
Ahead of the talks, European Union Economic and Monetary Affairs Commissioner Olli Rehn said that the region now faces a crucial 10 days to save the single currency bloc.
The euro was also sharply higher against the U.S. dollar, with EUR/USD rallying 1.37% to hit 1.3497.
Also Wednesday, a report from payroll processing firm ADP said U.S. private sector employment increased by a seasonally adjusted 206,000 in November, blowing past expectations for an increase of 130,000.
The previous month’s figure was revised up to a gain of 130,000 from a previously reported increase of 110,000.
The increase in November was the largest monthly gain since last December and nearly twice the average monthly gain since May when employment decelerated sharply.
Forexpros
