Today the Euro fell again. Some investors sold the currency as concerns mount about whether the European Central Bank (ECB) will be able to stem the debt crisis.As I predicted yesterday, although initial expectations that the ECB will step in to ease borrowing costs for Spain and Italy may have assisted the Euro in climbing to a one month high against the Dollar and rally against the Yen earlier in the week, this optimism is starting to fade. The result is that some investors are starting to book gains.
The Euro is further weakened by recent poor Euro zone economic data. Today the German economy ministry has also said that Germany is expected to face "significant risk" linked to the Euro zone crisis.
What is evident to me is that reserve managers are selling the Euro and will continue pulling funds out of the region.
I foresee that in the coming week, when the Euro zone second quarter gross domestic product data is due for release, further pressure will be put on the Euro as expectations are that the regions economy has contracted. This will pressure the ECB to cut interest rates.
What we are seeing right now is the Euro moving through a corrective phase. In the long term though, I expect a large decline.
The Euro was down earlier today by 0.3% to $1.2270, on track for its first weekly loss in three weeks.
Earlier, Chinese data was release which has hurt appetite for riskier assets and currencies. The results of the data were below forecasts and showed that Exports grew just 1.0% in July for a year, below market expectations of an 8.6% rise. Imports grew at 4.7%, compared to expectations of a 7.2% rise.
Growth linked currencies such as the Aussie fell on the news. The Aussie was also pressured earlier after the Reserve Bank of Australia (RBA) released its quarterly statement on monetary policy. The RBA upgraded its 2012 outlook for economic growth, however warned that "a strong currency could constrain expansion more than in the past".
The Australian Dollar was down 0.7% at $1.0503.
What I think we'll see now is that demand for risky assets will lessen, as investors chose the safety of the Dollar and the Yen.
The Dollar was earlier down 0.15% on the day, remaining range bound in the narrow 77.90 to 78.80 Yen range, at 78.54 Yen.
I expect that the Dollar could gain against the Yen as a result of rising U.S. Treasury yields. This could result in expectations of another round of bond buying by the Federal Reserve being lowered somewhat.
The Euro is further weakened by recent poor Euro zone economic data. Today the German economy ministry has also said that Germany is expected to face "significant risk" linked to the Euro zone crisis.
What is evident to me is that reserve managers are selling the Euro and will continue pulling funds out of the region.
I foresee that in the coming week, when the Euro zone second quarter gross domestic product data is due for release, further pressure will be put on the Euro as expectations are that the regions economy has contracted. This will pressure the ECB to cut interest rates.
What we are seeing right now is the Euro moving through a corrective phase. In the long term though, I expect a large decline.
The Euro was down earlier today by 0.3% to $1.2270, on track for its first weekly loss in three weeks.
Earlier, Chinese data was release which has hurt appetite for riskier assets and currencies. The results of the data were below forecasts and showed that Exports grew just 1.0% in July for a year, below market expectations of an 8.6% rise. Imports grew at 4.7%, compared to expectations of a 7.2% rise.
Growth linked currencies such as the Aussie fell on the news. The Aussie was also pressured earlier after the Reserve Bank of Australia (RBA) released its quarterly statement on monetary policy. The RBA upgraded its 2012 outlook for economic growth, however warned that "a strong currency could constrain expansion more than in the past".
The Australian Dollar was down 0.7% at $1.0503.
What I think we'll see now is that demand for risky assets will lessen, as investors chose the safety of the Dollar and the Yen.
The Dollar was earlier down 0.15% on the day, remaining range bound in the narrow 77.90 to 78.80 Yen range, at 78.54 Yen.
I expect that the Dollar could gain against the Yen as a result of rising U.S. Treasury yields. This could result in expectations of another round of bond buying by the Federal Reserve being lowered somewhat.
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