Euro exchange rate today: Reactivation of SMP programme could be a positive for EUR in the short-term
- Details
- Category: Exchange Rates
- Published on Tuesday, 19 June 2012 09:52
- Written by Will Peters
"A reactivation would likely be a significant short-term euro positive, however we do not see much chance of this in advance of the EU Summit" - UBS.
The euro (Currency:EUR) is tipped to receive a boost in the short-term on speculation concerning the reactivation of the SMP programme at the ECB, a move aimed at stabilising the Spanish banking sector.
The SMP (Securities Markets Programme) sees the ECB buy bonds of financially strained euro-zone nations.
A look at the latest spot rates sees the euro dollar exchange rate 0.25 pct higher at 1.2605.
The euro pound exchange rate is 0.31 pct up at 0.8052. Please see the latest exchange rate forecasts published at our IMT site via this Free Facebook entry page).
"Investors continue to debate whether the ECB will reactive its SMP program in a bid to drive down Spanish sovereign yields which yesterday reached new Eurozone highs. A reactivation would likely be a significant short-term euro positive, however we do not see much chance of this in advance of the EU Summit on June 28-29, even though Spanish bond markets may remain under stress as Thursday’s auction approaches," says a morning currency note from ECB.
Elsewhere, headlines from a draft G20 communique have made their way onto the newswires.
Indications are that the final text may set out in detail Europe’s aims for a more integrated banking system and even some steps towards closer fiscal integration.
Yesterday’s revelations that deposits in the Spanish banking sector dropped by 2.52% m/m in April have not helped sentiment.
Greece is still without a government in the wake of the weekend election, although "we do see a government emerge once coalition negotiations have concluded – the only question is how long such an administration can survive," say UBS.
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