April 24 Wednesday 11:40 GMT
The euro rose 79 points to 1.3033 from 1.2954 against the dollar on a resilient rebound despite the lower than expected results of the German IFO business sentiment survey.
The rally was aided by the weaker yen which continued to decline against the major currencies and as euro-swiss made extended gains above 1.2300.
There were also rumors that there was central bank participation in the euro’s peculiar rebound to 1.3030, particularly the Swiss National Bank to stem the Swiss Franc gains.
The German IFO Business Climate Index report fell for a second month in April to 104.4 from 106.7 in March versus the median forecast of 106.2.
The IFO Current Assessment fell to 107.2 from 109.5 versus the forecast of 109.9, while the IFO Expectations fell to 101.6 from 103 versus the forecast of 103.6.
The German Federal government sold 1.683 billion euros, at the top of its offering range, of its 2.5% July 2044 30-year bund at an average yield of 2.16% compared to the average yield of 2.45% from the auction of January 30. The average price came to 107.61. The bid to cover ratio was 1.5, below the 1.8 in January. The total volume issue was 2 billion euros as targeted.
Euro-yen rose to 129.80 from 128.80 (+100 points) while Dollar-yen rose to 99.72 from 99.32 (+40 points) holding on to these levels firmly as the Japanese Yen continued to slide in Europe from the news that Japan’s Meiji Yasuda Life Insurance Company intends to buy about 500 billion yen of foreign bonds.
Meiji Yasuda Life Insurance Company is Japan’s third largest private life insurance with total assets of about 30 trillion yen ($302 billion) and they tenatively announced that they plan to buy about 500 billion yen of foreign bonds in the fiscal year that began this month, per Toshihiko Yamashita, chief executive of the firm.
Yamashita added, while domestic bonds will remain at the core of its portfolio, domestic interest rates are very low while volatility is high and expressed their interest in other alternative assets with higher yields.
The Swiss Franc continued to decline against the euro as it broke through the psychological resistance and option barrier of 1.2300 and reached the European high of 1.2318. Traders have cited that central banks were buying the euros against the swiss franc and the dollar which pushed the euro higher to 1.3033 in Europe.
There was also renewed speculation that the Swiss National Bank may raise its current 1.2000 franc per euro cap to 1.2500. The SNB however, declined to comment on the rumor.
Euro Swiss rose to 1.2318 from 1.2215 on the intraday chart (+103 points) while Dollar-Swiss is steady at 0.9460 having risen 87 points yesterday to 0.9472 from 0.9385.