The Euro currency weakened against the U.S. Dollar and the Yen on worries that the region’s debt situation is worsening and that countries most in debt will inevitably default.
Meanwhile, the Yen rose against most of its peers as demand for growth-related currencies lessened. This took place after China released a report indicating that its inflation rate grew at a faster than anticipated pace in over two years. The news boosted speculations that growth in the second largest economy will fizzle out. China’s inflation woes also support rumors that its central bank may tighten fiscal policy, said Joe Manimbo, a specialist at Travelex Global Business Payments, a Forex exchange.
The current economic situation in China affected the Canadian Dollar causing it to drop versus the greenback. If the Bank of China raises the costs of borrowing money, it will dampen demand for commodities.
Other foreign exchange market news revealed that the New Zealand Dollar traded high against the U.S. monetary unit on a statement issued by the country’s Finance Minister, Bill English, indicating that although inflation has risen, it won’t affect the nation’s economy. The Kiwi lost some of its gains versus the U.S. Dollar on beliefs that China will curtail growth. The Australian Dollar sustained its first losses in close to four weeks soon after China issued data showing a hike in consumer prices.
Industrial Output and Consumer Sentiment increased in the U.S. causing a rebound in crude oil prices.
David Sumner is a freelance writer with a specialization in reporting on the world of finance. David holds a B.A. from the University of Maryland. Currently David is based in the U.S. but spends a good portion of the year traveling throughout Europe and Asia.
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