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Euro: Strongest Currency of the Day

By Kathy Lien
27 December 2007 23:31 GMT

The Euro was the strongest currency of the day, rising against the US dollar, British pound and Japanese Yen.  The comparatively rosy outlook of the Eurozone economy and the hawkishness of the European Central Bank made the Euro the de facto safe haven currency.  Even though investors have also poured money into the Swiss franc, it outperformed the Euro only marginally.  Preliminary data on German consumer prices are scheduled to be released tomorrow along with retail PMI.  The 0.6 percent rise in CPI in Saxony suggests that inflation rates across the country should remain high.  With business confidence falling to the lowest level in 2 years, there is a good chance that consumer spending could slow.  Meanwhile the Swiss franc was the only currency that managed to challenge the Euro’s rise.  Even though the currency is no longer backed by gold, it is still benefitting in times of geopolitical uncertainty, especially since it is not clear immediately how bad things may get. Switzerland will be reporting the UBS consumption index and their KoF Swiss leading indicators report.  With unemployment rising, industrial production and retail sales weakening, we could see a deterioration in both reports. 

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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27 December 2007 23:31 GMT