The euro held steady on Wednesday as the market gave a guarded reception to details on the eurozone's new lending facility and on proposals to expand funding for the IMF so it could lend to troubled members such as Italy. Eurozone finance ministers agreed to use the EFSF fund as a sort of bond insurance vehicle that would provide partial protection of 20-30 percent against losses on the principal of new bonds issued by a requesting member.
The euro was little changed at $1.3312, still above a seven-week low near $1.3213 hit late last week, but down from the previous day's high of around $1.3443. The single currency had slid 7 percent from a peak of $1.4248 hit in late October down to last week's low. It faces resistance near $1.3457, the 23.6 percent retracement of that drop. On the downside, there was talk of bids between $1.3275 and $1.3290.
The euro showed limited reaction to comments by European Central Bank governing council member Christian Noyer, who said a period of market disruption may involve temporary and exceptional interventions and that the ECB's bond buying programme it totally justified by the ECB's primary mandate. Noyer was speaking at a conference in Singapore. The single currency has gotten some respite in the past few days helped by signs that Germany and France are pushing for more rapid, deeper fiscal integration among eurozone countries, and hopes for IMF assistance for Italy.
News that S&P had downgraded a swathe of major global banks also added to the cautious mood. That was evident in S&P 500 futures which were down 0.8 percent. The Australian dollar dipped 0.4 percent to $0.9967. Earlier, the Aussie had risen to as high as $1.0087, helped by data showing that Australian business investment surged by the most in 16 years last quarter. The dollar held steady versus the yen at 77.95 yen, having backed off of a one-month high of 78.29 yen hit the previous day.
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