The Euro rebounded from the lowest price in over two years against the U.S. Dollar on speculation that most global central banks may soon implement measures in order to sustain economic growth. Officials from the European Central Bank said they were considering additional monetary easing, including a further reduction in the deposit rate, should the debt crisis in the E.U. worsen. The Euro currency remained strong as Italian borrowing costs declined, and despite the fact that Moody’s Investors Service downgraded Italy’s government bond rating to Baa2.
In other news, the Bank of England revealed a new lending program aimed at helping companies and households obtain credit. This caused the British Pound to rally to the highest level since November 2008 against the shared currency.
Forex trade releases showed that the Canadian Dollar gained the most in one week versus its American counterpart on the likelihood that China would implement more stimuli in order to bolster economic growth. The Loonie rose against the majority of its currency market peers before the Bank of Canada issues a decision on interest rates shortly. It climbed to the maximum price against the Euro since 1999.
In China, reports revealed that the economy expanded in the second quarter by less than economists had anticipated. Official figures indicated that China’s Gross Domestic Product grew 7.6%, thereby prompting currencies from nations that export commodities, such as the Australian and New Zealand Dollars, to advance against the greenback.
Lastly, Japan’s Yen hit close to a six-week high against the Euro on signs that most global economies have slowed down.