The euro was little changed Thursday in New York, even after indications that the currency union's leaders may be preparing a comprehensive response to the sovereign-debt crisis that's roiled markets for months.
The 17-member currency union, which is facing sovereign-credit downgrades and economic turmoil in its most vulnerable countries, could be announcing a troubleshooting plan within weeks, analysts said. This news came on the heels of a Swiss National Bank board member's comments earlier Thursday that interest-rate hikes aren't an effective method of squelching asset-pricing bubbles because they could hurt the wider economy--indicating that the meteoric rise of the Swiss franc could be coming to an end.
The euro gained against major currencies, hitting one-month highs against the Swiss franc (CHF1.30) and the Japanese yen (Y111.17). This partially reversed a record slide against Switzerland's currency, which has been seen as a safe haven for investors fleeing from the euro's woes.
Analysts said euro-watchers were waiting for a Feb. 4 European leaders' summit to see how the union would handle enhancements to the European Financial Stability Facility, the fund set up to backstop floundering governments' debts.
In news related to the U.S., data released Thursday morning showed a continued economic recovery. Market participants had a measured response.
"It's evident from the data today that there's a cyclical recovery going on in the U.S.," said Jessica Hoversen, fixed income and foreign exchange analyst at MF Global in Chicago. "The threats on the U.S. side are a very anemic housing market that seems to struggle with its recovery, and high unemployment."
China's widely watched GDP figures, released this morning, fueled investor concern because it grew more than expected. That led the dollar to strengthen as investors sought safety on concerns that Beijing will put the brakes on China's giant economy, senior market analyst Joe Manimbo of Travelex Global Business Payments wrote in a research note.
Investors are wondering, "is China going to continue to expand at the rate that it is, or are they going to implement measures to slow it down?" said Phillip Streible, senior market strategist at Lind-Waldock in Chicago.
At 5 p.m, the euro was trading at $1.3473 against the dollar, compared with $1.3474 late Wednesday, according to trading system EBS via CQG. The dollar was at Y82.98 against the yen, compared with Y82.02, while the euro was at Y111.80 compared with Y110.49. Meanwhile, the pound was trading at $1.5906 against the dollar, compared with $1.6000 late Wednesday in New York.
The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at about 78.821 compared with 78.566 late Wednesday in New York.
Traders were also watching the Australian dollar, a currency that's considered to be tied closely to commodity prices, in the wake of massive Australian floods last week. MF Global's Hoversen pointed to flood-related infrastructure damage at Australian mines. "I think the Australian dollar is not reflecting the impact of the floods yet," she said. The Australian dollar was trading at $0.9871 against the U.S. dollar, from $1.0008 yesterday.