• Inflation Worries Affect Majors
  • Inflation Worries Affect Majors

    David Sumner | 08:50 | 01/02/11
    The Euro and the Pound increased in price against the U.S. Dollar as data showed that the Euro-zone’s inflation rose to a two-year high. This was indicative ...

The Euro and the Pound increased in price against the U.S. Dollar as data showed that the Euro-zone’s inflation rose to a two-year high. This was indicative of the fact that the European Central Bank may be getting ready to raise interest rates. The Pound Sterling also went up in value because the Bank of England’s fiscal policy maker, Martin Weale urged the other members to increase the costs for borrowing. The currency surged up to $1.6049.

Meanwhile, the U.S. Dollar dipped to the lowest rate in close to four weeks against the Yen on reports that the country’s inflation grew at a slower than expected pace. The Federal Reserve is said to be more poised on observing core inflation while the ECB is focused on the type of inflation that makes the news.

To make matters worse around the globe, the continued political unrest that’s affecting Egypt has fueled the price of crude oil and has thus pushed up the value of the Norwegian Krone and Mexican Peso versus the U.S. Dollar. The Krone may perform better than other monetary units linked with commodities because of the violence in the Middle East and investors’ lack of appetite for risk.

The Euro rate went up to $1.3689 during yesterday’s American trading session; this was an increase of 0.6 percent; and the Dollar traded at 82.08 Yen. This hike in the currency rates came as a result of investors’ bets that the ECB will raise interest rates before the Federal Reserve does.

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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