With little economic data on tap for the Euro, the underlying currency fell to the mercy of what has been evolving for the past couple of sessions. Markets still wary of risk and exposure continued to pare back in carry trades involving the Euro, taking the currency lower through to support at 1.3600 briefly in New York.
Exacerbating the decline seemed to be concerns over the third allotment of cash to banks as the ECB lent 47.4 billion euros to institutions for the third straight day. However, to the rescue. It was IMF comments that helped to stem losses further throughout the day as officials noted that the “re-assessment of credit risk that is taking place will be manageable”. The statements are likely to shift market focus back to rate increases in the near term as ECB officials are set to raise rates by another 25 basis points to curb looming inflationary pressures.