Euro edges higher as ECB reports improved bank lending

[NEW YORK] The euro edged higher against the dollar on Tuesday after the European Central Bank reported eurozone banks were improving lending conditions for businesses, thanks to its stimulus program.

The ECB said the additional liquidity made available to banks through its quantitative easing (QE) programme, launched in March, was being used to grant loans over the past six months.

The euro traded at US$1.1346 around 2100 GMT, up from US$1.1322 at the same time Monday.

The positive report came ahead of the ECB policy meeting on Thursday in Malta.

"Virtually no one expects the ECB to say or do anything to strengthen the euro which would risk a steeper uphill battle against low inflation," said Joe Manimbo of Western Union Business Solutions.

For Barclays analyst Nikolaos Sgouropoulos, the most likely scenario "is a continuation of the dovish rhetoric, followed by the announcement of a QE time extension in December."

The Canadian dollar strengthened slightly a day after Liberal leader Justin Trudeau scored a landslide victory over Prime Minister Stephen Harper's bid for another term of Tory rule.

Trudeau's promise to increase spending to boost economic growth pushed the currency to C$1.2979 per US$1 from C$1.3017.

"Justin Trudeau's decisive election victory to be Canada's next prime minister buoyed the (currency) as his parliamentary majority helped to minimize any resulting political uncertainty," Manimbo said The Bank of Canada, meeting on Wednesday, is expected to keep its key interest rate unchanged at a near-record low.

"Easier fiscal policy in Ottawa could reduce some pressure on the BOC to cut lending rates further," said Omer Esiner of Commonwealth Foreign Exchange.

AFP