Forexpros – The euro rallied against the U.S. dollar on Wednesday, jumping over 1% after major central banks announced a coordinated action to support the global financial system which has come under strain as a result of the debt crisis in the euro zone.
EUR/USD hit 1.3532 during U.S. morning trade, the pair’s highest since November 22; the pair subsequently consolidated at 1.3468, surging 1.16%.
The pair was likely to find support at 1.3258, the days low and resistance at 1.3568, the high of November 22.
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 a coordinated move aimed at preventing a lack of liquidity in 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, in an effort to help boost liquidity and support the world’s second largest economy amid global market turmoil.
Risk appetite was further boosted after 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.
A separate report showed that manufacturing activity in the Chicago area rose more-than-expected in this month, climbing to a seven-month high.
Meanwhile, euro zone finance ministers were holding 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 higher against the pound, with EUR/GBP adding 0.26% to hit 0.8554.
Also Wednesday, the National Association of Realtors said U.S. pending home sales jumped 10.4% in October and were 9.2% above the same month last year.
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