Forex Market Update: Euro Bounces Back Against the Dollar
The euro bounced back against the U.S. dollar in mid-day trading on Tuesday as strong German economic data lifted sentiment. The yen, meanwhile, strengthened against the euro and the dollar in mid-day trading.
The euro initially rose after traders digested Germany’s ZEW survey of investors and analysts. The data showed that sentiment among analysts and investors rose in February to the highest level since April 2010. The robust economic data is a fresh sign that the euro zone economy, despite the disappointing fourth-quarter GDP numbers, is stabilizing.
The euro, however, failed to hold on to its gains and slipped. It rebounded in mid-day trading to hit a session high against the dollar. At last check, the single currency was up 0.3% to $1.3394. The single currency was down against the yen, though. At last check, it was trading 0.2% lower at 125.18 yen.
The yen also strengthened against the dollar following comments from Taro Aso, Japan’s Finance Minister. Aso said that he was not considering buying foreign bonds. Aso’s comments come a day after Japan’s Prime Minister, Shinzo Abe said that buying foreign bonds was an option as part of the world’s third-largest economy’s efforts to further ease its monetary policy.
The statements from Aso and Abe once again highlight the fact that there are differences in the government over monetary policy. Speaking to Reuters, Shaun Osborne, Chief Currency Strategist at TD Securities in London, said that developments in the past few days highlight the fact that there are internal rifts on the policy approach and there may be external constraints on what sort of easing measures Japan’s partners will deem acceptable. Osborne noted that near-term downside risks loom large for the dollar against the yen.
At last check, the greenback was down 0.4% to 93.61 yen.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.
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