European Session – Euro rallies on German inflation data
November 28, 2013 1:50 pm
The euro rallied after a series of data from the Euro zone, helping it rise to a new one-month high against the dollar and to a four-year high against the yen.
The euro climbed for a third day against the dollar and briefly breached the 1.36 level after above-forecast German inflation data which showed CPI rose 0.2% month-on-month versus 0.1% expected. Meanwhile the German unemployment rate was as expected. Eurozone money supply and confidence numbers also came in higher than expected. The upbeat data raised hopes that the ECB would be less likely to cut rates further.
The euro gained 0.11% to end the European session at 1.3591. Against the yen, the euro added 0.21% to 139.05.
Trading volumes were thin due to the Thanksgiving holiday in the US and dollar weakness was lending support to the euro as well as to sterling.
The pound hit a fresh ten-month high of 1.6352. Sterling strength was also in part due to the release of the Bank of England’s financial stability report. BOE Governor Mark Carney commented that the central bank will end incentives for mortgage lending.
Sterling ended the session with a 0.15% gain to 1.6334.
The yen remained under pressure and struggled near lows against the dollar. Much of the reason behind the yen weakness is because market participants have been using the high yielding Japanese currency for carry trades. Therefore they sell the yen to raise funds for carry trades as they expect the yen to weaken due to the Bank of Japan’s commitment to keeping ultra-loose monetary policy to boost growth in Japan.
The dollar briefly traded to a fresh five month high of 102.36 yen and ended the European session at 102.31 with a 0.10% gain.
The euro rallied after a series of data from the Euro zone, helping it rise to a new one-month high against the dollar and to a four-year high against the yen.
The euro climbed for a third day against the dollar and briefly breached the 1.36 level after above-forecast German inflation data which showed CPI rose 0.2% month-on-month versus 0.1% expected. Meanwhile the German unemployment rate was as expected. Eurozone money supply and confidence numbers also came in higher than expected. The upbeat data raised hopes that the ECB would be less likely to cut rates further.
The euro gained 0.11% to end the European session at 1.3591. Against the yen, the euro added 0.21% to 139.05.
Trading volumes were thin due to the Thanksgiving holiday in the US and dollar weakness was lending support to the euro as well as to sterling.
The pound hit a fresh ten-month high of 1.6352. Sterling strength was also in part due to the release of the Bank of England’s financial stability report. BOE Governor Mark Carney commented that the central bank will end incentives for mortgage lending.
Sterling ended the session with a 0.15% gain to 1.6334.
The yen remained under pressure and struggled near lows against the dollar. Much of the reason behind the yen weakness is because market participants have been using the high yielding Japanese currency for carry trades. Therefore they sell the yen to raise funds for carry trades as they expect the yen to weaken due to the Bank of Japan’s commitment to keeping ultra-loose monetary policy to boost growth in Japan.
The dollar briefly traded to a fresh five month high of 102.36 yen and ended the European session at 102.31 with a 0.10% gain.
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