The euro rose against most major currencies on Wednesday after Moody's Investors Service kept Spain's credit rating one notch above junk grade.

Moody's said it kept the nation's rating at Baa3, one notch above junk, because of the European Central Bank's willingness to buy Spanish government bonds to reduce their price volatility.

The ratings agency also said: "we believe that Spain will likely apply for a precautionary credit line from the European Stability Mechanism (ESM)."

The euro changed hands at $1.3122 from $1.3052 on Tuesday after trading at a high of $1.3138 in earlier trading.

The dollar index, which measures the US currency against a basket of six others, declined to 79.021 from 79.373 on Tuesday.

While sentiment towards Europe lifted, so did optimism about the US economy after upbeat housing data. Housing starts rose 15% in September to an annualised rate of 872,000 units, way ahead of market expectations of 770,000.

Against the yen, the dollar bought ¥79.02 compared to ¥78.92 on Tuesday.

Sterling rose to a one week high against the dollar on Wednesday after stronger than expected UK jobs data. Fresh data showed the UK unemployment rate unexpectedly fell to 7.9% in the three months to August.

The Australian dollar bought $1.0369 from $1.0269 the previous session.


CJ

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