Tuesday, 8 Feb 2011

Euro Rallies vs. Dollar on Increased Risk-Appetite

The euro strengthened against most of its major currency counterparts on Tuesday's trading session. The euro gained about 100 pips vs. the U.S. dollar, and the EUR/USD pair reached as high as the 1.3685 level. The euro also gained about 90 pips vs. the British pound, and about 60 pips vs. the Japanese yen.

The euro rallied today as stronger Japanese equities have enhanced risk-appetite in the market, and prompted investors to buy back the relatively risky currency. In addition, the euro strengthened today as optimism the global economic recovery is advancing and an easing of tensions in the Middle-East have also supported demand for higher-yielding assets.

Looking ahead to tomorrow, the U.S. Crude Oil Inventories report is scheduled for 15:30 GMT. Analysts have estimated that stockpiles rose by 2.4 million barrels last week, and as a result weakened crude prices. This release tends to have a large impact on the market, especially on crude oil prices, and traders are advised to be prepared.