The Euro inched higher against the U.S. Dollar following reports out of Germany denoting that consumers are optimistic about the economy, while the markets awaited the Federal Reserve to announce its decision on stimulus.
Euro Climbs On German Data
The Euro rose against the U.S. Dollar as Germany, which is the region’s largest economy, continued to publish positive reports. The German economy revealed further progress, thereby pleasing the markets. The Gfk consumer climate increased for the third month in a row, and went from 7.6 in November to 8.2 in the last month of 2013. The posting surpassed estimates for a reading of 7.8 points. The release followed previous economic calendar news indicating that the IFO business climate topped 110. This indicates that consumers, much like businesses, are positive that the Euro–zone’s economy will expand in 2014, with Germany leading the way. But the International Monetary Fund voiced its concerns regarding the possibility that the region may experience deflation. The IMF reiterated its worries at the World Economic Forum in Davos, Switzerland. Christine Lagarde, the IMF’s Managing Director, suggested that with the benchmark interest rate at 0.25 percent, the European Central Bank may have to opt for cutting the current deposit rates as a measure to bring the inflation indicators up. Meanwhile, equities rose again after the big sell-off which took days ago, and according to analysts, the aggressive rate increase issued by Turkey’s central bank is fueling a rally for the European stock markets.
Yen Advances On Rally
Following two days of declines, the Yen shifted its trend and climbed against the U.S. Dollar as the hike of emerging market currencies began to ebb. The Japanese monetary unit remained to the upside as those trading Forex waited for the Federal Open Mark Committee to announce whether it will reduce the current $75 billion in bond purchases by another $10 billion. Speculators were concerned about selling the greenback versus the monetary units of emerging countries prior to the conclusion of the Fed’s meeting.
Pound Remains Unchanged
The British Pound traded little changed against the U.S. Dollar and the 18-nation currency after official industry releases indicated that the gauge which measures house prices in the U.K. climbed for a 13th time this month. The Sterling strengthened against the majority of its counterparts ahead of a speech by the Bank of England’s governor, Mark Carney. According to the Nationwide Building Society, home prices rose 0.7 percent after posting a hike of 1.4 percent in December.