Euro Rose Sharply Against Dollar after U.S. Data Grow Weaker
July 7th, 2010 | 
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Euro rose sharply against the U.S. dollar on Tuesday, extending the benefits as investors felt confident enough to take the more risky assets, dealers said. They said that, despite recent U.S. economic data suggest the recovery is weaker slowing, concerns about the debt crisis of Europe has somewhat subsided, helped by news of the success of the Spanish government bond sales. It is taken as a simple voice confidence in Spain and the euro, support the currency against the dollar after the key services sector slowed more than expected in June.
Institute of Supply Management said its index of non-manufacturers fell to 53.8 points from 55.4 in May, compared with 55 economists forecast. In late London trading, the euro rose to 1.2645 dollars from 1.2538 dollars late in New York on Monday. Against the Japanese currency, the dollar slipped to 87.53 yen from 87.77 yen on Monday. Dealers said the euro also benefited from a stronger stock market but the single currency faces stern test ahead of the “stress test” for European banks to determine their financial soundness. There’s bad news in that area that would weaken investor confidence very quickly and may see euro came under pressure again, with the results of stress tests, banks are expected to be released later this month.
“Do or not the euro may extend gains from current levels this week depending on the level of the overall level of risk avoidance. Tones better than the stock supports the euro,” said Jane Foley, analyst at online trading Forex.com Company.
“That said, the results of stress tests on European banks tend to be a thorn in the side of the euro in the future,” added Foley.
Market is more quickly awaiting the European Central Bank policy meeting and the Bank of England on Thursday. Most analysts expect the ECB will maintain interest rates at a record low 1.0 percent set in May 2009, and bank President Jean-Claude Trichet will stress again to attract the support of the state if necessary to improve the balance sheet.
Bank of England is also expected to maintain interest rates at a record low 0.5 percent. In late trading in London Tuesday, the euro was at 1.2645 dollars against 1.2538 dollars on Monday, at 110.68 yen (110.05), 0.8326 pounds (0.8283) and 1.3383 Swiss francs (1.3348). Dollar stood at 87.53 yen (87.77) and 1.0583 Swiss francs (1.0646). The pound was at 1.5187 dollars (1.5136). On the London Bullion Market, gold prices fell to 1195 dollars per ounce from 1208 dollars per ounce on Monday.
Posted in Economy News | 
Tags: Bank England Thursday, England, London Tuesday, President Jean Claude Trichet
