EUR Gains on Renewed Risk Appetite
January 5th, 2010 Posted in Euro-Zone
The European single currency hit a 1-week high against the U.S currency as signs that the global economic recovery is gaining momentum spurred demand for higher-yielding assets. The EUR was up slightly at $1.4420 Tuesday, after advancing 0.6% the previous day.
The single currency also advanced against the British Pound for a 2nd day on speculation the Bank of England (BOE) may continue with its asset-purchase plan to lower borrowing costs. Analyst said that while most central banks are already talking about exit strategies, the BOE is still talking about extending asset purchases and that is weakening the Sterling. The Cable slid 0.2% below $1.6000 and may stay further under pressure. The Pound may stretch its decline vs. the U.S currency toward $1.57 this week
Against the Japanese yen, the EUR fell to 132.56 from 133.35 due to recent credit concerns in the Europe. Investors seem unwilling to buy the single currency which may decline below 132.00 later in the global day.
The EUR/USD cross is likely to keep strengthening further this week because of low yields on U.S. Treasuries, which dropped as Fed officials suggested the central bank will keep its interest rate low for some months.
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Tags: Cable, dollar, EUR, eur forecast, Euro, Euro-Zone, Forex, forex blog, Pound, Pound Sterling, Sterling
