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Euro steady after European Central Bank meeting

07 june 2012, 14:06
The euro held steady in Asian trade on Thursday morning after an overnight rise driven by the European Central Bank's move to keep interest rates at historic lows and cash flowing to eurozone lenders, AFP reports.

The single currency bought $1.2573 in Tokyo trade, slightly off $1.2580 in New York late Wednesday, while changing hands at 99.80 yen against 99.63 yen in New York.

The dollar rose to 79.38 yen from 79.20 yen.

Upbeat euro-buying sentiment continued after the ECB held interest rates unchanged at 1.0 percent Wednesday and said it would keep cash flowing to the 17-nation eurozone's embattled banks, at least through year-end, dealers said.

The beleaguered currency, which has treaded multi-year lows in recent weeks, was also supported by speculation that weak ECB growth forecasts would usher in future rate cuts, dealers said.

French and Spanish bond auctions later in the day will also be key cues for the euro, amid worries about Madrid's finances and fears over a possible Greek exit from the eurozone.

"It may seem as if concerns over the European debt crisis eased somewhat with the euro's rebound, but Thursday's Spanish and French bond auctions will serve as a test for measuring the market's sense of caution," said Sumino Kamei, senior analyst at the Bank of Tokyo-Mitsubishi UFJ.

Markets were also looking to Fed Chairman Ben Bernanke's congressional testimony later in the day for hints about loosening monetary policy to help kickstart the world's biggest economy.

Hints of further easing may boost the dollar to the 80 yen level, but a drop was in store for the greenback if the Fed chief's comments turn negative on the economy, said Masafumi Yamamoto, chief forex strategist at Barclays.

"But so far we believe the former to be more likely," he added.

-- Dow Jones Newswires contributed to this report --

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