Aug. 7 (Bloomberg) -- The euro rose to a more than three- week high versus the yen amid speculation that the European Central Bank is taking appropriate measures to quell the region’s debt crisis.
The shared currency gained versus most of its 16 major counterparts as a report showed Italy’s economy shrank less than economists predicted. Euro gains were supported as the European Union said it had received no requests for the region’s rescue fund to buy government bonds. Norway’s krone climbed after manufacturing increased.
“One of the biggest positions out there in the foreign- exchange space has been short euros,” MacNeil Curry, head of foreign-exchange and interest-rates technical strategy in New York at Bank of America Merrill Lynch, said in a television interview on “Lunch Money” with Sara Eisen and Stephanie Ruhle. “That is starting to come into question as price action trades back to the topside and people are forced to square back some of their positions.” A short position is a bet an asset will decline.
The euro rose 0.4 percent to 97.43 yen at 3:56 p.m. New York time after climbing to 97.82 yen, the strongest level since July 12. The yen fell 0.5 percent to 78.61 per dollar. The 17- nation currency was little changed at $1.2397.
The shared currency gained 0.3 percent in the past week versus nine developed-nation counterparts tracked by the Bloomberg Correlation-Weighted Indexes. The yen led decliners, dropping 1.6 percent, while the greenback fell 0.8 percent.
ECB President Mario Draghi outlined a plan last week under which the ECB may buy debt of struggling euro-bloc countries in tandem with the region’s bailout fund, while saying the details still need to be worked out over the coming weeks.
Germany is “not worried” by Draghi’s Aug. 2 statement on possible bond purchases, Chancellor Angela Merkel’s deputy spokesman Georg Streiter said in Berlin yesterday.
“The fact that the German spokesperson made an official statement for the first time about the country’s backing of ECB bond purchases is supporting the euro,” said Ken Takahashi, assistant vice president of global markets at Sumitomo Mitsui Trust Bank Ltd. in New York. “The market is reassessing the ECB’s decision and taking a more positive view on it.”