FOREX-Euro increases following a 2-year low but only predicted to be temporary
The struggling Euro was given its most needed break when it went higher against the dollar on Monday on what many called a “technical recovery” after a two-year low levelled earlier in the session even though the single currency battled more trials from the global expansion concerns and region’s current debt problem. Eurozone finance chiefs will hope to strategise a plan to boost Europe’s common currency; however investors remain reluctant regarding the closed door meetings in Brussels as they may only add more insult to the region’s economic injury in helping the indebted states and its banks. The high hopes following the summit took its toll on Spanish and Italian bonds with, yields plummeting down to unsustainable levels.
Good news came following Central Bank President Mario Draghi kept the door open to additional interest rate cutbacks believing the bank will only take the necessary steps based on economic data presented. The vigilant eyes of many big time investors see it as not enough solid precautions to be able to sustain enough gains for the economy.
While decreased rates would mean the lower demand for a currency, with the Eurozone fighting its way to maintain an economic sustainable growth any indications of actions to jump-start the economy will be highly taken as a positive move in the economy by investors. For the time being traders were still on the narrows seeing the fall of the Euro as too far and too fast for taking further risks in their investments. As it regained a momentary comeback, those who bet against the Euro were forced to trade losses, giving it more strength.
The Euro was last up 0.2 per cent next to the dollar at $1.2310 after rising at its highest so far at $1.2324 and a low of $1.2255 in the early trade sessions. Following the Euro and dollar exchange the dollar went stable at 79.63 yen moving way past from its two-week high rate on Thursday according to Reuter’s information.
The stress for actions by the European leaders is mounting as there are still distressing concerns that decisions on the matter regarding banking monitoring, use of Europe’s rescue funds, the much needed support to Cyprus and Spain as well as the grant special consideration to Greece will still take several months to wrap up. Economic strategists assessed that the Italian and Spanish bonds could thrust the Euro further down and possibly bringing the 2010 low into a real problem. The European Union Finance ministers are set to fund the Spanish government until 2014 to reach a deficit goal of 3 per cent of GDP.
EURO perceived moving at a snail’s pace
The Euro came with a lot of difficulties last week as apprehensions surfaced regarding the success of the June summit deal. It went down further after a widely anticipated interest rate cut by the European Central Bank last Thursday. The Euro has also gone down the currency yield rank from fourth lowest to an embarrassing second lowest yield so far. Meanwhile, Japan’s core machinery orders which include shipbuilding and utilities fell at an amazing record pace in May. The market’s reaction was voiceless since it fell short of its expectations and the Bank of Japan will stand solid on its policy at its meeting this week.