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Rate Hike Prospects and Higher Yields Boosts Euro Against the US Dollar
Tuesday, 10 April 2007 21:26:09 GMT
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Previous articles
Previous Articles
Oct 03 -
Euro/US Dollar Exchange Rate Forecast
Oct 06 -
US Dollar Rockets Higher on Demand for Treasuries, Will the FOMC Minutes Trigger a Sell-off?
Oct 06 -
Euro, British Pound Plummet On European Financial Crisis Concerns, Intervention On the Way?
Oct 03 -
Euro May Be Closing In On Its Own Financial Crisis And Rate Cuts
Oct 03 -
Dollar Could Slip on FOMC Minutes, Pessimistic Investor Sentiment
Oct 01 -
US Dollar Outlook Depends On Senate Approval of US Bailout Bill
Oct 01 -
Euro Slumps to 1.40 As Euro-zone Data Signal Recession, Key ECB Rate Decision on Thursday
Oct 01 -
Forex Seasonality in the Euro/US Dollar
Sep 29 -
US Dollar Dives as the House Votes Down Bailout Bill - Black Monday Part 2?
Sep 29 -
Euro Under Pressure as Credit Crisis Forces Bailouts of Belgium's Fortis, Germany's Hypo Real Estate
Sep 26 -
Dollar's Future Muddled By Financial Crisis, Expected Fed Cuts, NFPs
Sep 26 -
Euro Forecast Against the US Dollar Depends on ECB, US Treasury Bailout
Sep 25 -
Euro: Fundamentals Fade, Euro/Dollar Rally May Be Running Out Of Gas
Sep 24 -
Dollar Lacks Direction As Market Focuses On Testimony
Sep 24 -
Euro: Financial Crisis Furthers Euro Zone Recession Fears
Sep 23 -
Euro: Is the Euro-zone Headed Straight Toward Recession?
Sep 22 -
US Dollar Plummets More Than 2% as Credit Concerns Linger
Sep 19 -
Euro: Back To The Fundamentals
Sep 19 -
Dollar Weakness May Persist on Global Demand For Yield
Sep 18 -
Euro Consolidates Above 1.43, Swiss National Bank Leaves Rates at 2.75%
Written by Kathy Lien, Chief Strategist
The Euro staged a strong rally against the US dollar today and we are sure that the prospect of a rate hike and higher yield played a major role in the currency’s strength. EUR/JPY hit the highest level since the introduction of the Euro and in order to achieve such strength, we needed to see some EUR/USD buying as well. Economic data released overnight did not add to the move or take away from it. The German trade surplus narrowed more than expected in the month of February, while growth in French industrial production beat expectations. With nothing of consequence on the Eurozone economic calendar tomorrow, we expect traders to turn their focus to this week’s biggest event risk, which is Thursday’s ECB rate decision. The central bank is not expected to change rates, but as we mentioned yesterday, what the market is really looking for is his language at the accompanying press conference. Prior to the March rate hike, he introduced the words “strong vigilance” back into his vocabulary and the market took the EUR/USD from 1.3025 to 1.33 as a result. If the word reappears Thursday, we could see the EUR/USD test its all time high of 1.3667. If it doesn’t, then the market will question whether a rate hike will be delayed until June or if the central bank is planning to make a May hike its last. Either way, this is not positive for the Euro and could be what puts an end to the currency pair’s recent rally. Meanwhile, yesterday we talked about how prior extension moves in EUR/CHF have ended after the ninth trading day. We have seen this statistical significance holds once again as the currency pair ended its nine day long rally on the back of strong unemployment figures today. The unemployment rate fell to 3.0 percent in the month of March from 3.2 percent in February.
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