Euro at two-week high against dollar

The euro rose to a two-week high against the US dollar today as optimism surrounding a euro zone debt deal prompted short covering.

A draft document showed plans for a wide-ranging response to the euro zone debt crisis at a meeting of euro zone
leaders.

The euro hit a session high of $1.43339, on trading platform EBS, its highest since July 8th. It was last at $1.43040, up 0.6 per cent on the day.

Europe is willing to let Greece default under a crisis response that would involve a bond buyback, a debt swap but no new tax on banks, EU sources said as euro zone leaders began a crucial emergency summit.

Fears that Greece's debt crisis will spread to bigger economies in the euro zone have kept markets on edge since early July, with yields on Italian and Spanish government bonds reaching euro zone lifetime highs above 6 per cent.

Irish bond yields fell today, with the benchmark 10 year bond yield retreating to just over 12.4 per cent, and the two year yield declining to 20.1 per cent.

Few details of the common Franco-German position were revealed, but competing proposals on how to involve the private sector and avoid triggering a Greek default have been circulating.

In recent sessions the greenback has suffered on uncertainty ahead of an August 2nd deadline for raising the US public debt ceiling and the threat of a downgrade to the United States' triple-A credit rating in the event of even a brief default.

The White House signalled it could support a short-term increase in the US borrowing limit for "a few days" if lawmakers agreed to a broad deficit reduction deal but needed more time to pass it.

Reuters