Euro Shows Promise, BoE releases Inflation Report
The currency exchange markets will be affected dramatically by the inflation report that comes out of the Bank of England today. It is widely believed that the BoE will lower its expectations for growth due to the current crisis in the Eurozone, causing massive financial instability. The Euro marginally fell against the Pound on Tuesday opening at 1.2575 and closing at 1.2591, but did make gains against the US dollar.
The EURUSD opened at 1.2411 before closing at 1.2421, a marginal but welcome gain for the currency currently entrenched in trouble. In Fact the day’s gains came on the backdrop of the Italian government announcing that their 2nd quarter DPS had fallen by 1.1%. Production in germany also fell by 2.5% year-on-year and 1% month-on-month.
This morning, however, we have already had reports of a much more favorable kind for the 17-nation central currency. Italian trade balance numbers have highlighted a jump in the countries surplus budget, moving from €15.6bn to €17.9bn. This will relieve some of the hesitation investors currently have, which should have a positive effect on the markets as well as the currency itself.
In Asia the Rupee closed down on the US dollar for the first time in 3 days. The Rupee had rallied alongside the Asian markets after the US job growth report released late on Friday. Today, however, the Rupee closed at 55.42 to the US dollar after opening at 55.14 – a loss of around 0.64%. The root cause for this was increased demand for US$ by importers, such as oil refineries.