Forex News – Euro up after Italy unveils austerity measures

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Euro opened the new trading week higher after good news over the weekend from Italy. Prime Minister Mario Monti announced fresh austerity measures and unveiled a 30-billion-euro package. EURUSD opened Asia 0.2 percent up from Friday’s New York close and as high as 1.3423 before steadying into a range and easing down to 1.3397. The focus now turns to the meeting of German Chancellor Angela Merkel with French President Nicolas Sarkozy later in the day to see whether they can come up with a plan for stronger fiscal union and stricter enforcement of the euro zone budget rules to present at the EU Summit later this week.

 

Looking ahead, this week may prove to be more volatile for the euro as the EU Summit and European Central Bank meeting near. There is growing speculation that the ECB will cut interest rates at its policy meeting on Thursday and offer fresh liquidity measures for banks, if not more sovereign bond buying.

 

Sterling opened in Asia 0.2 percent higher than the Friday close in New York and then eased down to 1.5583 to settle in a range.

 

Against the yen, the dollar was bid to lift it to an early session high of 78.09 yen before the pair slid to 77.91 as investors are cautious ahead of key developments from Europe today. The dollar index eased 0.1 percent to 78.558.

 

 

The Australian dollar edged down against the greenback as investors are uneasy a day before the Reserve Bank of Australia’s heavily watched December meeting. Uncertainty exists whether the RBA will ease its key cash rate for the second-straight month. AUDUSD opened at 1.0251 and slid to 1.0207.