Euro Rebounds as ECB Speaks Out
The Euro rebounded yesterday from its 6 month low against the Dollar as ECB executive claims talk of interest rate cuts is premature.
The Euro gained against the Dollar and the Pound yesterday, rebounding from its 6 month low.
This gain was in response to claims from Axel Weber, Executive Member of the ECB Board that speculation of interest rate cuts by the ECB was premature.
The Dollar's rally in recent months has been partly based on the perception that the ECB will be forced to cut rates, but there is growing speculation the dollars rise has been “overdone”. Kamal Sharma, strategist at JP Morgan Chase & Co. suggests the ECB announcement is part of a drive to correct the perception policy makers are in favour of rate cuts which has been driving down the Euro in recent months.
The US Dollar also fell for the second day against the Yen as the price of oil climbed and persistent troubles in the US mortgage market indicate the Dollar remains vulnerable at its high levels.
Pound Remains Low
The Pound remains in a four month low against the Euro amidst the release of data yesterday showing house prices fell for the ninth consecutive month. The British Bankers Association showed approval of new home rates slumped by 65% this month prompting the pound to fall to 80.67 pence per euro, its lowest rate since April 17.
The Sterling-Dollar Exchange rate was steady at 1.8348 showing a decline this month of 7.5%, putting the Pound within reach of its biggest monthly loss against the Dollar since October 1992, when it dropped 12%.
Aussie and Kiwi
The Australian and New Zealand Dollar both climbed yesterday following data released from the Australian Government showing investment had increased almost 3 times beyond expectations in the second quarter. Economists predict the data may prompt the Reserve Bank into a more dovish stance on interest rates, and inspire more confidence in the resilience of the economy
The kiwi was the third best performer in a basket of 16 major currencies against the Dollar with interest rates in the two nations still providing lucrative returns for international investors.