Euro touched its Three-Week High | IFCM
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Euro touched its Three-Week High - 11.10.2011

Asian stocks extended gains of global markets on Tuesday, following yesterday’s advance of European and US major stock indices. Japanese Nikkei Average increased by 1.95% by the end of the trading session after US S&P 500 added 3.41% on Monday, showing the biggest gain since August 23. In recent days global market sentiment has been dramatically improved by a string of positive US data releases, including payrolls and manufacturing statistics, although analysts are still concerned about the absence of a firm resolution to the European debt crisis, which may continue to temper demand for riskier assets. Treasuries fell on Friday, pushing the yields of the benchmark 10-year notes to 2.07%, the highest since September 15. Today investor sentiment in Asia was improved as well after a Chinese state investment fund bought shares of four biggest nation’s banks. US Dollar The dollar experienced a considerable drop yesterday and weakened against all its major counterparts as investors’ expectations that European authorities will take decisive measures in the nearest future lowered demand for refuge. Tomorrow the Federal Reserve will release the minutes of its latest policy meeting, which took place on September 20. Chairman Ben Bernanke said last week in his speech to Congress that the central bank can take further steps to sustain a recovery that’s “close to faltering.” Therefore if it comes true, the central bank may further flood the economy with dollars and the greenback may face more pressure in the coming months. The dollar index, which measures the unit against a basket of six US major trading partners’ currencies, fell today to 77.61 from 78.39 yesterday morning. Euro The euro finally managed to show a considerable recovery against the US counterpart, gaining yesterday about 250 basic points. The single currency rallied yesterday after the leaders of France and Germany pledged to deliver a plan by November, which could help to stem the debt crisis. The euro touched its three-week high against the dollar (1.3697), but traded today in a narrow range 1.3616-1.3657. The gains however were limited due to an uncertainty over the next rescue package for Greece, as policymakers are waiting for a completed report on Greek deficit reduction and austerity measures progress. On the other hand there are increasing concerns that Slovakia may impede ratification of the expansion of the European Financial Stability Fund’s firepower, and that could mean more talks and time are needed. British Pound The pound strengthened against the dollar yesterday as well, rising from 1.5526 to 1.5656, but weakened against its peers during the Asian trading session today before reports that may add to signs the UK recovery is too weak. According to preliminary estimations, industrial production fell by 0.2% in August after dropping by 0.2% a month earlier. At the same time, in annual figures the measure may fall by 1.2%, showing that the economy needs more stimuli. The pound fell this morning against the greenback from 1.5660 to 1.5613.
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