The Euro hit a record high against the US dollar today on the back of dollar weakness and stronger economic data. Despite all the claims that the French are making about the damaging effect of a strong Euro, the trade surplus actually increased substantially in the month of August.
Exports to the rest of Europe, Asia, Russia and OPEC were strong while exports to the US remained steady. This is probably one of the main reasons why the ECB refuses to drop their hawkish monetary policy or intervene in the Euro. German producer prices are due for release tomorrow. Stronger wholesale prices reported last week puts the risk of PPI to the upside.
Written by Kathy Lien, Chief Currency Strategist for DailyFX.com