EUR Gains vs. Yen, Pound Advances against USD
December 11th, 2009 Posted in Euro-Zone
The European currency rose against the Japanese yen Friday as strong Chinese economic data fueled optimism about the global economic recovery, to the detriment of the safe-haven, low-yielding Japanese currency. EUR climbed to intraday high of 130.73 yen; after data showed Chinese industrial production rose 19.2% from a year earlier in November.
Against the U.S dollar the EUR headed for a 2nd weekly decline, the longest stretch in 2 months, on speculation the credit ratings of more European nations will be lowered. The Euro-Zone currency continued to struggle as markets fretted about the weaker links in the European economy, including Greece and Spain. Fitch dropped the credit rating this week below the single-A bracket for the first time in 10 years while Standard & Poor’s cut Spain’s outlook to negative.
The British pound, which has been under pressure from concern about Britain’s fiscal position, gained 0.2% o $1.6313 and climbed 1% to 145.20 Yen. While the U.K. is lagging the Euro-Zone and U.S. in exiting the recession, reports are showing signs of a recovery. U.K. consumer confidence stayed close to the highest level in 1 1/2 years in November according to Nationwide Building Society.
Still, the GBP remains in a weakening trend and is still very much vulnerable. The U.K currency slipped already 0.1% against the Dollar and dropped 1.9% the common European currency in November as the U.K. stayed mired in the recession in the 3rd quarter. In addition to the ongoing recession, the heavy deficit and a possible expansion of the QE program, may hurt the Pound some more. The stronger U.S dollar that was seen this week doesn’t help the Pound either.
