Friday, 12 Mar 2010

EUR Strengthens on Encouraging Data

The Dollar paired some of its earlier losses today after the release of stronger than expected U.S. economic data; fueling bets that the Federal Reserve will tighten monetary policy sooner than expected. The U.S. Retail Sales unexpectedly rose last month by 0.3%. Excluding autos, sales jumped 0.8%.

However, despite the boost from the Retail Sales, the dollar remained down on the day against the EUR and the U.K. Pound as the Reuters/University of Michigan index on consumer sentiment declined to 72.5 in March from 73.6 in February and while the European currencies rallied, supported by strong economic data and rising optimism that the Greek sovereign debt crisis is coming to an end. Now investors are awaiting the Federal Open Market Committee meeting next week for any clues on policy actions in the statement following the rate decision.

Crude Prices dropped over 200 pips in late trading today to as low as $80.69, although they are now stabilized at about $81.10. The EUR is currently at $1.3756 from $1.3679 late Thursday. The Dollar is at Y90.51 from Y90.56, while the EUR is at Y124.55 from Y123.86. The U.K. Pound is trading at $1.5184 from $1.5063 Thursday.