The euro edged up today as the European Central Bank continued buying Portuguese and Irish government bonds, easing euro zone debt concerns and helping the currency rebound from a 2.5 month low hit earlier this week.
ECB president Jean-Claude Trichet insisted on French radio RTL that "there is no crisis of the euro as a currency" and said he did not think austerity measures to reduce swollen public deficits would drive the region back into recession.
But price movements were limited ahead of US payrolls data, especially after a firm ADP jobs report earlier in the week, and a surprisingly strong US housing number yesterday adding to views of a US economic recovery.
"Expectations are creeping up so a (nonfarm payrolls) number bigger than 150,000 would be needed to get any market reaction," said Ian Stannard, senior currency strategist at BNP Paribas.
The euro was underpinned as risk premiums on government bonds issued by euro zone periphery states fell on Friday, with further bond buying by the European Central Bank reassuring investors.
The 10 year Irish Government bond was up this afternoon, with yields down 0.292 per cent to 8.209 per cent.
The Irish index of shares was down marginally, losing 10 points to 2741. Bank shares were mixed, with Bank of Ireland rising 2.8 per cent to 33.1 cent but AIB and Irish Life and Permanent down 2.1 per cent and 2.9 per cent respectively.
A rise in euro zone service sector activity, retail sales and the Bundesbank raising Germany's growth forecasts for this year also supported the single currency, as investors' immediate concerns about the euro zone were alleviated.
The euro rose 0.2 per cent on the day at $1.3252, remaining above a 2.5 month low of $1.2969 hit on Tuesday after massive selling in euro zone periphery government bonds.
Large euro/dollar option expiries at $1.3200 and $1.3250 were slowing the rally, while the technical picture was helped by the euro holding above its 200-day moving average at $1.3123.
But many analysts were not persuaded the euro had turned a corner.
"The ECB has done a good job in reassuring the markets this week and the euro zone PMI this morning has also helped, but the euro is not out of the woods yet," said Jane Foley, senior currency analyst at Rabobank.
Reuters