Wednesday, February 6, 2013

Euro Rallies To Highest Level Since 2011.

Recent data has been showing that Europe's economy may be improving and this has helped to boost the Euro.

As a result, by Friday the Euro had reached it's highest level as against the Dollar since November 2011.

A gauge of manufacturing in the Euro region in January had risen the most in nearly a year.

The ECB's balance sheet was reported to have fallen to 2.93 trillion Euros ($4trillion) in the week ended 25th January. This was its lowest level in a year and the central bank has refrained from purchasing any sovereign debt for 45 consecutive weeks.

Banks had also managed to repay 137.2 billion Euros of emergency three year loans to the ECB, with a further 3.5 billion Euros expected to be returned this week.

Although an ECB meeting is scheduled for Thursday, most economists predict that the Central bank won't raise its 0.75% benchmark rate.

As things stand, the Euro's recent gains have been quite dramatic, with regular data in quick succession, indicating that Europe's economy seems to be stabilizing, and I foresee that, in the short to medium term, the Euro will continue to strengthen.

Earlier today, the Euro fetched $1.3623 while the Yen rose 0.4% to 126.21 per Euro and gained 0.1% to 92.65 per Dollar.

The Yen had declined recently against the Dollar for 12 straight weeks, its longest consecutive decline since 1971.

Japan's Prime Minister, Shinzo Abe, is set to pick a new central bank governor to boost monetary stimulus and this has seen the Yen take a tumble of late.

The Aussie rallied against most of its peers, having climbed 0.2% to $1.0428 and touched 96.79 Yen, its highest level to the Yen since August 2008, ahead of the Reserve Bank of Austria's (RBA) meet on Tuesday.

Most economists expect that borrowing costs will remain unchanged and for inflation targets to remain in a range between 2 to 3%.

Strengthening economic growth and rates staying on hold should be positive for the Aussie.