Stock Market Watch

Forex Market Update: Euro Down After Weak Industrial Output Data

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The euro fell sharply against the U.S. dollar on Thursday after an economic survey showed that industrial output contracted in July.

The common currency was last down 0.26% against the dollar to trade at $1.3276

Meanwhile, the Dollar Index rose 0.12% to 81.62 as expectations are rising that the Federal Reserve, which meets on September 17-18 for its next open market committee meeting, might start slowing the pace of asset purchases.

Currency analysts believe that the tapering process will commence soon but the pace of scaling down will be slow. It is speculated that the Federal Reserve will start narrowing its $85 billion worth monthly asset purchase program initially by $10 billion to $15billion.

“Going into the Fed meeting, people are wondering how much tapering it will do,” said Mankash Jain, head, FX and Investment Management, Solo Capital, a London-based hedge fund while speaking to Reuters.

“We are not going short dollars into the meeting and believe there is an upside” added Jain.

The dollar index which was slightly higher during Asian trading hours, climbed sharply after the Labor Department said that weekly first time jobless claims fell by 31,000 to a seasonally adjusted 292,000, which is the lowest level recorded since April 2006. Economists polled by MarketWatch were expecting 330,000 seasonally adjusted claims.

However, the dollar quickly pared gains after the Labor Department said that two states encountered some technical  problems in their computer systems; as a result, these states couldn’t record all first time claims. This was the key reason why claims fell so sharply, said one department analyst.

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edliston
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.

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.

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