FX round-up: Effects of ECB QE felt Down Under

LONDON (ShareCast) - The European single currency was largely unchanged against the US dollar on Tuesday as traders continued to weigh the newsflow coming out of Greece. Staff at the European Central Bank believe the ability of banks from the Mediterranean country to borrow from the Greek central bank should be curbed, Bloomberg reported, citing people with knowledge of the discussions.

However, one of those persons clarified that curtailing the ECB´s Emergency Liquidity Assistance (ELA) facility would only be studied if an agreement between Athens and its creditors is not forthcoming.

Euro/dollar edged 0.02% higher to 1.0739.

Indeed, the latest remarks coming out of the negotiations between the Greek government and the Troika of creditors seemed to indicate that a deal was still possible, with Eurogroup president Jeroen Dijsselbloem saying there were reasons for optimism.

Acting as a backdrop, the ZEW institute´s gauge of economic confidence in Germany slipped to a reading of 53.3 in April from 54.8 in the month before (consensus: 55.3).

"The German economy is in good shape. [...] However, the current weakness of the world economy is dampening export prospects and reducing the scope for further improvements of the economic situation in Germany," said ZEW President Professor Clemens Fuest.

ECB QE felt Down Under Speaking from New York the governor of the Reserve Bank of Australia, Glenn Stevens, said an interest rate cut is on the table while at the same talking down the currency.

"I suspect further adjustment [in the exchange rate] lies ahead, I´ll be a bit surprised actually if it doesn´t go down some more yet." Nonetheless, the Australian dollar seems to have largely brushed off those remarks, depreciating by an imperceptible 0.02% to 0.77163.

In parallel, on Wednesday Stephen Miller, head of Australian fixed income at Blackrock (NYSE: BLK - news) , said quantitative easing by the European Central Bank was behind the large flows into Aussie bonds from Japanese clients.

Dollar/yen rose 0.31% to 119.657.