Euro jumped against the dollar in late Asian session trading on Friday after news of some positive developments at the EU Summit. European leaders agreed to use its bailout funds flexibly and committed to a deal that once the ESM rescue fund is in place, it could recapitalize banks directly.
European Council Chairman Herman Van Rompuy said the aim was to create a single supervisory mechanism that would recapitalize banks without adding to government debt soothing fears over growing credit strains in Italy and Spain. Loans will be transferred from the EFSF to ESM without a change in seniority of the debt.
EURUSD surged 1.2 percent, its biggest daily jump in 8 months, to 1.2626. Earlier in the session the pair traded as low as 1.2431.
EURJPY rose on ESM news, from an early low of 98.51 to 100.20.
GBPUSD rose alongside EURUSD and hit a high of 1.5627, moving off a two-week low of 1.5483.
USDJPY opened in Asia at 79.43 and was dragged down to a low of 79.12. The pair regained losses after the news from Europe and climbed to 79.40.
AUDUSD soared to 1.0191 from 1.10017, boosted by a rise in commodities after the ESM news.