The Dollar Has Strengthened Against The Euro
05 July 2012 10:00 - Tor FX
Daily update 5/7/12
The Pound is holding steady against the US Dollar ahead of the Bank of England’s interest rate decision. The bank is expected to announce that it will be introducing further monetary stimulus into the country’s struggling economy. If the Bank decides to implement larger-than-expected stimulus then the Pound could cede ground against its peers.
Investors are placing bets that the Bank will introduce a further £50 billion into the economy as it implements a third stage of quantitative easing.
The Dollar has strengthened against the Euro ahead of today’s interest rate announcement from the European Central Bank. Poor economic data out of the Eurozone and the UK has benefited the currency as investors flock to the reliable ‘Greenback’ for a safe haven. The Euro had been holding steady against the Dollar, but the release of data showing that Germany was also heading in the direction of possible recession tipped the pair into the Dollar’s favour. So far this year the Dollar is the second best performer after the Japanese Yen as investors continuingly seek safe havens in these turbulent times for the global economy. Currently the Dollar is trading in the region of 0.798 against the Euro and 0.641 against the Pound.
Rumours are circulating among economists that the European Central Bank is going to cut interest rates to a new record low of 0.75%. The move comes after yesterday’s dismal economic figures for the Eurozone. The workhorse of the region, Germany posted contraction in its manufacturing sector and its lowest figures for three years. The PMI readings were slightly up on May’s figures rising to 46.4 from 46.0 in May. However the news that Germany has slid into the list of countries facing contractions across its economy is worrying news.
The ‘Aussie’ is trading slightly down against most of its peers ahead of today’s European Central Banks interest rate announcement. Economists expect the ECB to lower interest rates by 0.25. Australia is benefitting from a strong economy and has posted daily highs against other currencies for the past few days.
The main potential drag on the ‘Aussie’ comes from the slowdown of the Asian economies and the slowing down of the Chinese economy. Currently the Australian Dollar is trading in the region of 0.891 against the Euro and 1.026 against the US Dollar.
The Canadian Dollar almost hit a seven-week high against the ‘Greenback’ and hit a two year high against the Euro. The grim economic data out of the Eurozone and disappointing data released by the United States on Tuesday has boosted confidence in the ‘Loonie’. The poor data out of Europe has caused investors to seek safer investments elsewhere.
Currently the Canadian Dollar is trading in the region of 0.986 against its American neighbour.