Prices were up on Friday and for the week on German government bonds, the benchmark bonds for the eurozone.

Continuing low yields there are seen as yet another indication that the European Central Bank will not be cutting interest rates anytime soon.

Some analysts said that the reason for the rise in German bond prices was that China’s currency revaluation could increase investor demand for European government debt.

Yields on the 10-year Bund were down nearly 6 basis points on the week to a yield of 3.23 percent, leaving the margin between yields on 10-year US and German bonds at 1 percentage point.

This was the biggest gap between the two in five years.

Tags: European Stocks & Shares News, Interest Rates News by Brian Turner
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The euro gained 1.1 percent to $1.2200 in relation to the US dollar on Tuesday, for a two-day gain of 1.9 percent. This put the dollar at a three-week low against the euro. Some analysts saw the dollar’s decline as a correction rather than a sign of new weakness in the US currency, but news positive to the euro also played into the shared currency’s gains.

One member of the European Central Bank’s governing council was quoted as saying that rising oil prices could force the ECB to raise its inflation forecast, lessening the chances that eurozone interest rates would be cut in the near future.

In addition, the Organization for Economic Co-operation and Development said that the ECB could reasonably hold interest rates at present levels as long as the outlook on inflation stays consistent with price stability in the medium term. The OECD had recommended that the ECB cut eurozone interest rates by 50 basis points less than two months ago.

Tags: Exchange Rates News, Interest Rates News, European Economy News by Brian Turner
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The euro fell to its lowest point in relation to the US dollar in fourteen months as it reached $1.1869 against the greenback.

The European parliament has added to pressure on the European Central Bank to cut interest rates there by turning down a report that praised the ECB’s monetary policy by saying that central bank is too focused on stability while not taking into consideration the importance of economic growth.

The ECB has not raised interest rates in two years.

Tags: European Stocks & Shares News, ECB: European Central Bank News, European Economy News, European Union News by Brian Turner
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