Dollar Falls on Forecast Fed Lag Behind ECB

Dollar , Falls on , Forecast Fed , Lag  , Behind , ECB

 The US dollar fell against most major currencies today on the speculation that the Federal Reserve will lag behind the European Central Bank in increasing its borrowing costs as the US economy isn’t recovering fast enough to warrant higher rates.

Today’s macroeconomic reports supported such outlook. The unemployment claims in the US rose from 385,000 to 412,000 last week, while they were expected to drop to 379,000. The Producer Price Index grew 0.7 percent in March, slower than expected 1.1 percent.

GBP/USD jumped from 1.6267 to 1.6370 and USD/JPY dropped from 83.82 to 83.19 today as of 14:302GMT.

If you want to comment on the US dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.

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Euro Gains Even Amid Debt Crisis

Euro  , Gains , Even , Amid , Debt , Crisis

The euro posted the unexpectedly strong gains today despite speculations about possible default of Greece and spreading of the 

sovereign-debt crisis continue to plague markets.

The reason for such surprising performance was anticipation of another interest rates hike by the European Central Bank. ECB governing council member Nout Wellink said that the recent increase of the interest rates was an ”extremely important” signal for investors that shows higher inflation shouldn’t be counted on.

John McCarthy, director of currency trading at ING Groep NV, said:

The prospect of an ECB rate hike is in the forefront of people’s minds. For the time being, the euro is receiving a boost from the prospect of higher rates.

The idea of raising borrowing costs in the European Union when some of the member nations are on the brink of default looks brave, to say the least, but traders think that such move is possible and that’s driving markets today.

EUR/USD advanced from 1.4233 to 1.4337 today as of 19:46 GMT. EUR/JPY rose from 117.65 to 118.25, following the slump to the intraday low of 117.08, and EUR/CHF went from 1.2755 up to 1.2898.

If you want to comment on the euro’s recent action or have any questions regarding this currency, please, feel free to reply below.

 

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