Monday, 5 Jul 2010

Euro Weakens As ECB Expected To Leave Rates At 1.00%

The Euro slid today against most of the major currencies. The Euro fell against the Dollar and the EUR/USD tumbled to the 1.2508 level. The Euro fell against the Yen as well, and the EUR/JPY pair was trading below the 110.00 level during most of the day.

The main reason for the Euro's weakness seems to be the Minimum Bid Rate which is the European Central Bank's (ECB) Interest Rates announcement for July. Due to the fragile status of several nations within the Euro-Zone, the ECB isn't likely to hike rates, and most analysts predict that European interest rates will remain at 1.00%. If the ECB will indeed leave rates at 1.00% on Thursday, the Euro might weaken further against the major currencies.

Looking ahead to tomorrow, the most significant economic publication looks to be the U.S. Non-Manufacturing Purchasing Managers' Index (PMI). It is a survey of about 400 purchasing managers who are asked to rate the current business conditions. If the survey will beat expectorations for 55.1, the Dollar could further correct its losses vs. the Euro.