Euro climbs to six-week high against yen

The euro hit a six-month high versus the yen today following comments from Germany Chancellor Angela Merkel which hinted that the European Central Bank will launch action to curb the debt crisis in the euro zone.

The dollar also shot up to a five-week peak against the struggling yen, driven by the recent spike in US Treasury yields on the back of more positive economic data and as investors were more willing to buy riskier assets which in turn hit the safe-haven yen.

The German Chancellor said that the statement by European Central Bank President Mario Draghi in July that do whatever was needed to save the euro was exactly the mindset of European leaders. Her remarks cooled talk of disagreements among the leaders in the bloc on the best way to solve the problems and were likely to offer support to the common currency.

The euro remained well above its recent two-year low versus the greenback, supported by talk that the ECB would purchase Italian and Spanish bonds in September to cut the struggling nations’ borrowing costs. It also climbed by 0.3 per cent to 98.40 yen, the highest it has been since early last month.