WORLD FOREX: Euro Gains After Reassurance From ECB Official





The euro gained against the dollar in thin trading Thursday as a key official with the European Central Bank repeated assurances Europe will stand together to protect the common currency.

German Bundesbank President Axel Weber, also an influential voice on the ECB's governing council, said euro-zone countries have no alternative to protecting the euro.

"The euro is among the world's most stable currencies," Weber said at a conference in Berlin sponsored by a German newspaper. Weber also said Spain is highly unlikely to need euro-zone aid.

While Weber's support for the euro echoed earlier comments from European leaders, they were enough to trigger gains in the common currency in the thin trading flows resulting from the Thanksgiving Day holiday in the U.S., said Dave Bradley, director of foreign exchange at Scotia Capital in Toronto.

Further waning of trading flows later on Thursday could prevent the euro from extending its short-term gains, he said. "After Europe goes home, it's going to be very quiet this afternoon," Bradley said.

Late Thursday morning, the euro was at $1.3370 from $1.3327 late Wednesday, according to EBS via CQG. It touched a high of $1.3378 in late-morning trading. The dollar was at Y83.65 from Y83.62, while the euro was at Y111.85 from Y111.43. The U.K. pound was at $1.5772 from $1.5766. The dollar was at CHF0.9993 from CHF0.9966.

The ICE Dollar Index, which tracks the dollar against a trade-weighted basket of currencies, was at 79.640 from 79.800.

Other developments were supportive for the euro Thursday, with other market watchers attributing some of the euro's gains to buying against the yen.

The Wall Street Journal also reported that the European Commission is pushing to double the size of Europe's EUR440 billion bailout fund for indebted euro-zone countries, according to people familiar with the situation.

The proposal by the European Union's executive arm has run up against opposition from Germany, the EU's biggest economy, which is unwilling to expand the size of the fund, the report said.

The dollar rallied against the Swiss franc earlier Thursday, moving above parity with that currency for the first time since Sept. 21, before ceding some of its gains.

Market positioning is helping drive the greenback's gains against the Swiss franc, and it could continue to push higher against that currency, said Elsa Lignos, G10 foreign exchange strategist at RBC Capital Markets in London.

The dollar reached a high of CHF1.0021 against the franc Thursday, according to EBS via CQG.

While it was able to reclaim some lost ground Thursday, the euro remains overshadowed by Europe's continuing sovereign debt crisis as the announcement of Ireland's four-year budget plan Wednesday failed to increase confidence in the country's ability to avoid a debt default.

The Irish austerity proposals, which will cut spending by EUR10 billion, are likely to further reduce the ruling coalition's chances of survival in a general election expected early next year.

The first test of the government's position will come early Friday, when the results of a by-election in County Donegal held Thursday will be declared.

"Ireland is as yet an unresolved problem for policy makers, with an important vacant parliamentary seat election today set to cut the [government] majority to just two, ahead of a critical Dec. 7 budget vote," said currency strategists at ING in London.

"The inability so far to convincingly ring-fence the Irish situation is feeding worry over Portugal and Spain," ING said.