Euro Watch

On the 28th of February, the Dollar went one step lower to reach a record low against the Euro. The dollar has been doing very badly in the recent past against the euro. On Thursday it came down a bit too low to make a record. The reason for the decline in dollar value on the 28th was because of some of the depressing economic reports about the US economy that came out. Another reason for the drop in dollar value is because of the wide spread belief that the Federal Reserve is going to keep cutting the interest rates.

The Euro during the day hit a sequence of highs of which $1.5087 was the highest. The Euro finally settled at $1.5059 when trade closed in the evening. The value of Euro on Tuesday in the late trading session in New York was $1.4967. The dollar also took a fall against the Japanese Yen. It fell from 107.26 yen to 106.07 yen by the end of trade on the 28th of February.

The effect the low of dollar is going to create is rather harsh on the Americans who will be visiting the European continent. The rising value of pound along with the euro is going to mean that the Americans will find it very difficult indeed. They would end up paying a lot more than what they are used to paying during their stay in Europe.

On the contrary the high value of Euro against the dollar would mean good news for the Europeans. They would be able to buy more than what they would have usually done so because of the high value. Another positive thing for the Europeans about the euro gaining more value against the dollar is that the goods that are coming from the continent would become more expensive for the customers who are living outside it. This would then hack into the manufacturer’s profit if they try to keep the price of products at a constant level as that of US Dollar.

This prompted the budget minister of France to call the Euro a ‘handicap for their exports’. The strength of the euro is not expected to create any lasting impact on the German economy as per the words of the chief economist of Germany’s Chamber of Commerce.

Many economists in the continent feel that the Euro is not going to lose value anytime soon. The main reason that is attributed for this is because of the worsening in the American interest rate differentials. This in the process would then take out an important support for the US dollar. Over that the possibilities of many other countries switching a part of their foreign currency reserves out of the US dollars in some time is very high.

Since the US economy is trying to keep a recession out of the country by any means the fears of inflation are very high in the country. All this put together hints that the US economy is not going to recover anytime soon. This would also mean that the US dollar is going to stay in a weak position for quite a while.

Tags: European Economy News, Exchange Rates News by Michael Greene
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The Koruna of Czech is experiencing great prospects and it recorded gain for the fifth week trading against the Euro. The Czech currency also registered a record gain on the 22nd of February. This buoyancy of the Koruna is attributed to expectations that the Central Bank will be increasing interest rates. The Koruna of Czech gained the most as against the 16 most traded notes in the week that concluded. The gain of Koruna came when the policy makers increased the standard lending rate of 1.25 percentage points to 3.75% which for the EU is still the lowest rate. The forward rate agreements indicated that the bank will relax borrowing expenses still further in the face of accelerated economic growth for the fourth quarter which stood at 6.9%.

The strategist for emerging-market currency with 4Cast Ltd. in London Nicholas Kennedy said that the gain by Koruna is quite positive and he further added that traders are looking for a single reason to hold back but they cannot find one. At the end of the week, the Koruna gained by 24.990 per euro which is the record level for the Czech currency since the common currency for Europe was introduced in 1999. In Prague the Koruna stood at 25.060 and in the earlier week it had recorded 25.206. Another distinction the Koruna has gained is that it became the world’s most successful currency for this year while trading against the Euro. The Czech Koruna recorded a gain of almost 6%. The Koruna as well gained by 16.906 per dollar from its February 15 gains of 17.168. On February 18 the Czech currency moved to 24.944 however traders in the market are of the opinion that this advancement of the Koruna was mainly because of a single trade.

A trader at the biggest bank in Czech by assets Ceskoslovenska Obchodni Banks AS, David Sykora expressed that the gain is possibly a botch and it is called as the miss hit deal and cannot be termed as the record. The forward rate agreements indicate that the central bank in Prague is likely to hike to its key rate by another twenty five basis points in the coming six months. In order to curb inflation the central bank has maintained its tight monetary policy, the inflation had shot to 7.5% in January which the highest inflation in nine years.

In the other currency trading, the Lira of Turkey dropped by 0.4% in the week and stood at 1.2063 per dollar on Friday following the deployment of 10,000 troops into northern Iraq to fight terrorists of the PKK or the Kurdistan Workers’ Party. An economist with UniCredit MIB in Vienna Simon Quijano-Evans told his clients that the lira would find support from the investors residing in the country since the people supports this decision of the government. The zloty of Poland moved to 3.5692 per euro from its earlier week’s 3.5770 position. However the leu of Romania and forint of Hungary dropped against the euro.

Tags: Exchange Rates News by James Gardner
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The euro has enjoyed yet another significant trading session against the dollar, which has seen its value edge close to the $1.43 mark off the back of investor anticipation of more Federal Reserve interest rate cuts.

The dollar weakened yet further in Asian trading amidst fears that negative US data due this week could prompt the Federal Reserve to cut interest rates even further when they meet this month, a move that would cause further devaluation of the dollar across the globe. The dollar has seen significant losses since the Reserve cut rates by 0.5% points last month.

Meanwhile the value of the euro continued to ride high with anticipation of the European Central Bank maintaining interest rates at their current 4% level when their policy committee meets this week, which will continue to support the current strength of the euro against the dollar.

In Asian trade today the euro was up to $1.4283 against the dollar, edging ever closer to the landmark $1.43 figure. However, should prolonged strength in the euro become a more permanent fixture, businesses within the eurozone trading abroad may find themselves in significant difficulties.

Plane manufacturer Airbus have already issued a warning that a rate of $1.45 for the euro could lead to extensive job cuts, as it eventually becomes priced out of its market and is forced to cut fares.

The strong euro means that those trading in export goods outwith the eurozone, even within the EU, are facing uncompetitiveness and weaker sales in the short term, with unemployment a probable side effect.

Whilst many have called for eurozone interest rates to be cut amidst ongoing fears of the strong currency valuation, it is thought that Jean Claude Trichet will refrain from making any such announcement as he delivers the ECB’s verdict later this week, with the threat of inflation and overheating very much a primary consideration.

Tags: ECB: European Central Bank News, Exchange Rates News by stewart
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Comments from the president of the European Central Bank on Thursday after the Bank’s decision to maintain interest rates at 2.5 percent for the time being were interpreted to mean that the Bank will hike interest rates at its June meeting. These comments showed little concern for the current strength of the euro and led to further gains in the shared currency.

The European currency added 0.4 percent to $1.2675 versus the US dollar and was up 0.2 percent to ¥143.90 in relation to the Japanese yen. The euro was at £0.6861 against sterling after having dropped to £0.6836 earlier in the session on the release of strong economic data out of the UK.

The shared currency was a bit weaker, however, versus the Swiss franc at SFr1.5602. The Swissie was also up 0.4 percent to SFr1.2313 in relation to the US dollar and added 0.3 percent to ¥92.21 against the yen.

Tags: ECB: European Central Bank News, Exchange Rates News by Brian Turner
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Comments from the president of the European Central Bank on Thursday after the Bank’s decision to maintain interest rates at 2.5 percent for the time being were interpreted to mean that the Bank will hike interest rates at its June meeting. These comments showed little concern for the current strength of the euro and led to further gains in the shared currency.

The European currency added 0.4 percent to $1.2675 versus the US dollar and was up 0.2 percent to ¥143.90 in relation to the Japanese yen. The euro was at £0.6861 against sterling after having dropped to £0.6836 earlier in the session on the release of strong economic data out of the UK.

The shared currency was a bit weaker, however, versus the Swiss franc at SFr1.5602. The Swissie was also up 0.4 percent to SFr1.2313 in relation to the US dollar and added 0.3 percent to ¥92.21 against the yen.

Tags: ECB: European Central Bank News, Exchange Rates News by Brian Turner
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The euro weakened on Thursday after the European Central Bank voted to keep interest rates at 2.5 percent. While some analysts still expect a rate increase in May, the president of the ECB made comments after the decision that indicated that the Bank is not leaning in that direction. Some analysts responded by saying that while a May increase seems unlikely, there will probably be a hike in June. Other analysts are standing by their predictions of a move in May, basing their opinions on available data.

The single currency was up to $1.2333 against the US dollar, a seven-month high, and at ¥144.92 against the Japanese yen, before the Bank’s decision was announced. After the news, the euro dropped 0.4 percent in relation to the dollar, to $1.2219 and declined by 0.3 percent versus the yen to ¥143.88

In the UK, where the Bank of England also voted to keep interest rates at their current level of 4.5 percent, sterling added 0.5 percent versus the euro to £0.6979 after having dropped to £0.7021 against the shared currency, a fifteen-month low.

Tags: Exchange Rates News by Brian Turner
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The euro was stronger on Tuesday on new data that tended to reinforce the expectation that eurozone interest rates will be raised again. The probability that the European Central Bank will send rates higher in May has been estimated at anywhere from 50 percent to 90 percent, and some analysts even suspect that a hike might come in April. Among the data adding credence to these predictions are a higher Ifo business sentiment index out of Germany that put sentiment at a 15-year high in March. Additionally, the eurozone’s M3 broad money supply was up to 8 percent in February, from 7.6 in January.

At mid-day in New York, the euro had gained 0.5 percent to $1.2070 versus the US dollar. The shared currency was up by 0.9 percent to ¥141.50 in relation to the Japanese yen, and it rose 0.4 percent to £0.6902 against sterling.

Tags: Exchange Rates News, Interest Rates News by Brian Turner
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The euro was stronger on Tuesday on new data that tended to reinforce the expectation that eurozone interest rates will be raised again. The probability that the European Central Bank will send rates higher in May has been estimated at anywhere from 50 percent to 90 percent, and some analysts even suspect that a hike might come in April. Among the data adding credence to these predictions are a higher Ifo business sentiment index out of Germany that put sentiment at a 15-year high in March. Additionally, the eurozone’s M3 broad money supply was up to 8 percent in February, from 7.6 in January.

At mid-day in New York, the euro had gained 0.5 percent to $1.2070 versus the US dollar. The shared currency was up by 0.9 percent to ¥141.50 in relation to the Japanese yen, and it rose 0.4 percent to £0.6902 against sterling.

Tags: Exchange Rates News, Interest Rates News by Brian Turner
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The euro declined versus sterling and the yen on Tuesday on the news that the ZEW index of investor sentiment in German had dropped to 63.4 in March, down from 69.8 in February and against expectations of a rise to 71. The decline in sentiment was blamed on rising interest rates around the world.

The euro dropped 0.3 percent to £0.6879 versus sterling and lost 0.7 percent in relation to the yen, to ¥141.10.

Tags: European Economy News, Exchange Rates News by Brian Turner
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The euro declined versus sterling and the yen on Tuesday on the news that the ZEW index of investor sentiment in German had dropped to 63.4 in March, down from 69.8 in February and against expectations of a rise to 71. The decline in sentiment was blamed on rising interest rates around the world.

The euro dropped 0.3 percent to £0.6879 versus sterling and lost 0.7 percent in relation to the yen, to ¥141.10.

Tags: European Economy News, Exchange Rates News by Brian Turner
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The euro rose in relation to most major currencies during the week ending March 3. It was up 1.3 percent to $1.2031 versus the US dollar, gained 1 percent to ¥140.12 against the Japanese yen, and rose 0.8 percent in relation to sterling, to £0.6859.

The euro’s success came as the European Central Bank once again raised interest rates by a quarter point, to 2.5 percent, after having hiked rates by the same amount in December. Comments from ECB board members made it clear that interest rates will go up again in the foreseeable future. Besides raising rates, the ECB also revised its forecasts for growth and inflation for the year, predicting that both will be higher than previously expected.

Accordingly, Goldman Sachs raised its forecast for eurozone interest rates at the end of the year from 2.5 percent to 3 percent. Meanwhile, analysts at Citigroup attributed at least part of the euro’s advances to the narrowing yield spread between two-year government bonds in the eurozone and the United States.

Tags: ECB: European Central Bank News, Exchange Rates News, Interest Rates News by Brian Turner
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The euro rose in relation to most major currencies during the week ending March 3. It was up 1.3 percent to $1.2031 versus the US dollar, gained 1 percent to ¥140.12 against the Japanese yen, and rose 0.8 percent in relation to sterling, to £0.6859.

The euro’s success came as the European Central Bank once again raised interest rates by a quarter point, to 2.5 percent, after having hiked rates by the same amount in December. Comments from ECB board members made it clear that interest rates will go up again in the foreseeable future. Besides raising rates, the ECB also revised its forecasts for growth and inflation for the year, predicting that both will be higher than previously expected.

Accordingly, Goldman Sachs raised its forecast for eurozone interest rates at the end of the year from 2.5 percent to 3 percent. Meanwhile, analysts at Citigroup attributed at least part of the euro’s advances to the narrowing yield spread between two-year government bonds in the eurozone and the United States.

Tags: ECB: European Central Bank News, Exchange Rates News, Interest Rates News by Brian Turner
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In the eurozone on Thursday, the euro gained value after the European Central Bank voted to raise its main refinancing rate by a quarter point to 2.5 percent. At the same time, the ECB president made comments that indicated that there will be more rate hikes to come this year. He said that the current rate hike will only “contribute” to keeping inflation in check.

The ECB has predicted that inflation this year will be around 1.9 to 2.5 percent, replacing its December forecast of inflation in the 1.6 to 2.6 percent range. The Bank also predicted that the eurozone economy will grow by 1.7 to 2.5 percent this year, somewhat more than its earlier estimate of 1.4 to 2.4 percent growth for 2006.

The euro gained 0.9 percent on the US dollar to $1.2016, while it added 0.8 percent in relation to sterling, to £0.6862. The shared currency was also up in relation to several Scandinavian and Eastern European currencies, and it gained 1 percent to ¥139.60 versus the Japanese yen.

Tags: ECB: European Central Bank News, Exchange Rates News, Interest Rates News by Brian Turner
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The euro was a bit stronger on Tuesday, increasing by 0.1 percent to $1.1902 in relation to the US dollar. The shared currency was trading at ¥139.77 against the Japanese yen.

The shared currency was helped by the ZEW index, which showed the German economy upbeat despite a bit of a decline in the expectations index, which fell to 69.8 in February, slightly below the expected level of 71.0 but still close to a high due to gains since November.

Tags: ECB: European Central Bank News, European Economy News, Exchange 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: European Economy News, Exchange Rates News, Interest Rates News by Brian Turner
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The euro continued to decline against other currencies on Friday, falling 0.8 percent for the week to $1.2130 in relation to the US dollar, a nine-month low.

It also declined 0.1 percent for the week to a one-year low of ¥131.51 against the yen. The euro also fell 0.8 percent on the week in relation to sterling, to £0.6690, a ten-month low, and it was down 0.8 percent to NKr7.8358 against the Norwegian krone.

That was a two year low. The euro was affected by new French data showing industrial production down 0.3 percent in April, a larger than expected drop and the third consecutive month of decline.

Also, the French trade deficit rose from €2.34 billion in March to €3.22 billion in April as a result of record imports.

Tags: European Economy News, European Stocks & Shares News, Exchange Rates News by Brian Turner
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Rumors ran rife on Wednesday that the European Monetary Union might be headed for a breakup. One manifestation of the rumor was that the German Bundestag had ordered a report to look at what the consequences would be for a country that wanted to leave the EMU.

The German finance ministry called the rumors “absurd”, but the talk still affected currency trade even though most analysts believe that a breakup of the eurozone is not very likely at all. One analyst quantified the possibility of such a breakup at 5 percent or less.

Still, many analysts feel that the possibility cannot be entirely ignored. Amid the rumors, the euro lost another 0.6 percent in relation to the US dollar on Wednesday to $1.2234, an 8-month low. The euro also reached a 9-month low against the yen, falling 0.7 percent to ¥132.59.

The shared currency fell against sterling as well, 0.3 percent to £0.6749, a four week low. It hit a 2-year low against the Norwegian krone, falling 0.5 percent to NKr7.9053.

Tags: European Economy News, European Stocks & Shares News, European Union News, Exchange Rates News by Brian Turner
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The euro continued to break new records this week as it rose further against a weaker dollar. The euro reached a new high of $1.3667 on Thursday, and continued to remain high.

Expectations in the markets are that the USD will be devalued further in an attempt to lessen the impact of the US trade deficit. However, the central banks may be given a role at the G7 summit to help strengthen the USD.

Tags: Exchange Rates News by Brian Turner
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Although share prices across Asia have continued record rises, despite the weekend’s Indian Ocean quake disaster, fears of economic growth being dented in already recovering economies has left the Yen at a new low against the Euro.

The yen dropped to 141.60 against the euro, before rallying at 140.55 by the end of trading. Traders warn that the traditionally quieter Christmas trading period means that small movements can appear otherwise larger, and the Yen is expected to recover more ground over January.

Tags: Exchange Rates News by Brian Turner
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Continuing worries about the US trade and budget deficits has led to a new record low in the value of the USD against the Euro.

The Euro reached $1.3516 a the New York Stock Exchange (NYSE), before rallying to $1.3509.

The new low for the dollar was blamed on fears that a fall in the US housing market could hamper consumer spending, and economic growth forecasts with it.

Tags: Exchange Rates News by Brian Turner
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