Euro Rises as on Bundesbanks' Monthly Report

Euro strengthens today as Bundesbank discussed ECB's forward guidance in its monthly report. Bundesbank noted that ECB is "not tied" and if price pressures are "higher than currently assumed", an increase and interest rates "is not ruled out".

 

Also, Bundesbank said Germany will return to "normal steady growth" in the second half of the year. And, "the significantly increased economic activity in the spring means that the German economy has returned to its normal utilization."

 

EUR/USD edges higher to 1.3374 but is kept below 1.34 level so far. Meanwhile, EUR/JPY broke last week's high of 130.72 to resume recent rebound.

 

Sterling also rises against dollar and yen today as the Confederation of British Industry raised growth forecast for 2013 to 1.2%, up from prior 1.0%. 2013 growth projection was also revised up to 2.3%, up from prior forecast of 2.0%.

 

CBI noted that the UK economy has "started to gain momentum and confidence is picking up". Nonetheless, it would like to see a "full-blown rebalancing" before calling it a "sustainable recovery". And, it hoped that increase in business investment and trade would begin to emerge in 2012 as Eurozone starts growing again. It expected business investment to contract -2.8% in 2013 and bounce back by growing 7.3% in 2014.