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Euro broadly lower on G-20 outcome, higher oil

Published 02/27/2012, 06:21 AM
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Investing.com - The euro was broadly lower against its major counterparts on Monday, after a weekend meeting of Group of 20 nations postponed a decision on increasing the resources of the International Monetary Fund in order to assist the euro zone.

During European late morning trade, the euro was lower against the U.S. dollar, with EUR/USD sliding 0.30% to hit 1.3408.

The G-20 Group postponed a decision on increasing the lending capacity of the IMF and said any decision on outside help will be conditional upon on European governments increasing the size of the region’s debt firewall.

Germany has remained opposed to enlarging the size of the European Stability Mechanism, the permanent euro zone bailout fund that is to become active this year.

Market sentiment was also dented as the recent rally in oil prices fanned concerns that higher prices could create a drag on the global economic recovery.

Concerns about higher energy costs overshadowed optimism about the European Central Bank's second liquidity boosting operation, set to take place on Wednesday, after the bank carried out a similar successful operation in December.

Elsewhere, the euro was weaker against the pound, with EUR/GBP losing 0.31% to hit 0.8448.

The single currency retreated from a four-month high against the yen, with EUR/JPY tumbling 0.83% to hit 108.29 but held steady against the Swiss franc, with EUR/CHF inching up 0.01% to hit 1.2050.

The euro was mixed against the commodity linked Australian, New Zealand and Canadian dollars, with EUR/AUD dipping 0.02% to hit 1.2570, EUR/NZD inching down 0.03% to hit 1.6083 and EUR/CAD easing up 0.14% to hit 1.3461.

In New Zealand earlier, official data showed the trade balance swung to a deficit of NZD199 million in January, from a surplus of NZD306 million the previous month.

Also Monday, Italy saw its short-term borrowing costs fall to the lowest level in 18 months, after selling EUR8.75 billion of six-month bills at a yield of 1.2%, down from 1.97% last month and EUR3.5 billion of nine-month bills, at an average yield of 1.29%.

Later in the day, Germany’s parliament was to vote on Greece’s second bailout, which was already approved by euro zone finance ministers last week.

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