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Euro trading higher ahead of German court ruling

Euro trading higher ahead of German court ruling

The euro has risen against the US dollar this morning, climbing to a near four-month high after the German Constitutional Court said it would make a ruling on the ESM tomorrow.

Germany’s constitutional court had been set to rule on Wednesday as to whether Germany can legally participate in the euro zone’s permanent bailout fund, a vital decision as the ECB can buy government bonds only in conjunction with the bailout fund. Some market players expect the court to rule the fund unconstitutional, but some think the judges could attach fresh conditions on any future aid Germany may grant to other euro zone countries.

Meanwhile, Spanish Prime Minister Mariano Rajoy said late on Monday that he expected the European Union to set reasonable conditions for Spain if the country sought a bailout but added no decision on a bailout would be taken before the Sept. 14-15 meetings of euro zone and EU finance ministers. Greece also revealed they are struggling to persuade foreign lenders to accept a plan to save nearly 12 billion euros over two years, vital to unlocking aid payments.

The poor U.S job data released on Friday raised expectations that the Fed will likely launch another asset purchase programme on Sept 13. With expectations of quantitative easing by the Fed, the euro is likely to have some support against dollar. The EUR/USD trading at a range of 1.2755-1.2820.

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