Euro Gets Boost as Rate Cut Possibility Fades

  August 27th, 2013 at 13:43, Miranda Marquit

Euro banknotes and coinsEarlier in the month, there had been talk of a possible rate cut at the next ECB meeting. However, the chances of a rate cut are diminishing, and that is providing help for the euro, even as risk appetite flees in the wake of troubles in Syria.

The European Central Bank has made it clear during the crisis that it is willing to do whatever it takes to keep the eurozone intact. Additionally, ECB President Mario Draghi has talked about maintaining loose monetary policy in order stimulate the eurozone economy.

All of the concern recently has led some to speculate that the ECB could cut its rate from the 0.5 per cent it’s at right now. However, the improved data out of the eurozone is reducing the chance of an interest rate cut by the ECB. With the eurozone economy moving out of recession, there is little need for the kind of stimulus that comes from rate cuts.

The news has given the euro a bit of a boost; the 17-nation currency is hanging in there, even as risk appetite fades in the face of geopolitical troubles in the Middle East.

At 13:40 GMT EUR/USD is up to 1.3386 from the open at 1.3338. EUR/GBP is up to 0.8611 from the open at 0.8583. EUR/JPY is down to 130.2625 from the open at 131.6865.

If you have any questions, comments or opinions regarding the Euro, feel free to post them using the commentary form below.

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