Euro Gains as US Data Sparks Talks About Stimulus
The euro advanced against other major currencies today as poor macroeconomic data from the United States weakened the dollar and spurred speculations that the Federal Reserve will stimulate the economy to support the faltering recovery.
The recent streak of negative fundamental reports gave evidence that US recovery is not as robust as many economists were thinking before. The Consumer Price Index was down 0.3 percent in May, while it was stable in the preceding month. Claims for unemployment benefits climbed from 380,000 to 386,000 last week, while analysts promised that the claims would stay unchanged. The Fed policy makers will meet on June 19 to discuss monetary policy and it will be interesting to see how they react to the negative indicators.
As for Europe, there was no reason to be optimistic about the region, especially after Spain was downgraded. Nevertheless, the Forex market was surprisingly favorable to those who prefer risk today. The optimism is unlikely to persist for long, but for now those who seek higher yield are in a good position to trade.
EUR/USD rose from 1.2563 to 1.2627 and EUR/JPY climbed from 99.76 to 100.25 as of 23:23 GMT today. EUR/GBP was up from 0.8100 to 0.8119.
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