Credit: Forexpros - The euro was up against the broadly weaker U.S. dollar on Wednesday, climbing to a three-week high amid market talk that the European Central Bank was purchasing Spanish and Italian sovereign bonds.
EUR/USD hit 1.4516 during U.S. morning trade, the highest since July 27; the pair subsequently consolidated at 1.4488, gaining 0.57%.
The pair was likely to find support at 1.4250, the low of August 15 and short-term resistance at 1.4535, the high of July 27.
The euro was boosted after traders said the European Central Bank bought Italian and Spanish government debt, in an effort to ease pressure on the region's third and fourth largest economies.
Italian 10-year bond yields were three basis points tighter at 4.96%, while Spanish 10-year yields were unchanged, also trading at 4.96%.
Last week, the ECB purchased EUR22 billion worth of Italian and Spanish sovereign debt. The amount exceeded purchases made by the ECB in May 2010, when it first launched emergency purchases of Greek bonds. Then, it bought EUR16.5 billion.
Meanwhile, the U.S. Bureau of Labor Statistics said earlier that producer price inflation rose by a seasonally adjusted 0.2% in July, after declining by 0.4% in June. Analysts had expected PPI to rise 0.1% in July.
Year-over-year, the producer price index rose at an annualized rate of 7.2% in July, above expectations for a gain of 7.0%.
Core PPI, which excludes food and energy costs, rose by 0.4%, the largest monthly gain since January. Analysts had expected core PPI to rise by 0.2%.
Also Wednesday, official data showed that consumer price inflation in the euro zone held steady at 2.5% in July, while core CPI rose 1.2%.
The single currency was pressured earlier after Tuesday's meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy failed to ease concerns over the euro zone's ongoing sovereign debt crisis.
Elsewhere, the euro was fractionally higher against the pound, with EUR/GBP adding 0.03% to hit 0.8757.
Later in the day, the U.S. was to produce government data on crude oil stockpiles.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
