Stock Market Watch

Forex Market Update: Euro Gains after Upbeat Zew Index

by ·


The euro gained against the U.S. dollar on Tuesday after closely watched German ZEW Index showed that business outlook in Europe’s growth engine was improving consistently even as caution ahead of the Federal Reserve’s policy rate statement kept pressure on the greenback.

The euro was last up 0.23% against the dollar to trade at $1.3365.

The German ZEW Index, a gauge on business sentiment, climbed to 49.6 in September from 42.0 in August, a highest level since April 2010. The data reflects improving financial and economic environment in Europe’s largest economy, which in turn might support Chancellor Angela Merkel’s prospects in winning a third term in upcoming elections.

However, gains for the common currency were  capped as investors expect the Federal Reserve to eventually start slowing the pace of economic stimulating measures, albeit gradually. A recent Reuters’ poll showed that economists expect the Fed to trim its $85 billion worth bond purchase program by mere $10 billion.

Still, even a moderate tapering will be dollar supportive. Speaking to Reuters over the matter, Niels Christensen, a currency strategist at Nordea, Copenhagen said if the Fed, as expected, cuts the asset purchase program by $10 billion then it will be good enough to spike interest rates and push up the dollar.

The dollar Index, a measure on U.S. unit’s performance against a basket of six major currencies, slipped 0.15% to 81.15.

Against the yen, the dollar was up 0.09% to 99.14 yen.








More Posts by this author

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.

You may also like...