The EUR/USD rose in value on Monday, Nov. 24, as global market participants responded to global developments including promising German economic data and comments made by a top European official.
One of these developments involved the People’s Bank of China cutting interest rates for both loans and deposits in an effort to help the nation’s lending institutions reduce borrowing costs for businesses and attract savers, according to The Wall Street Journal. The interest rates on loans granted to businesses experienced a larger reduction than those for deposits.
Amid these developments, the currency pair rose to as high as 1.2444, according to FXStreet. The EUR/USD later retreated from this level, trading at 1.2435 at the time of report.
German economic data
Figures provided by research institution the Ifo Institute showed that in November, the Ifo Business Climate Index for industry and trade in Germany reached 104.7, up from 103.2 in October. This improvement caused the reading to change its course, as it had previously moved lower for six consecutive months.
Many individual sectors enjoyed stronger business conditions during November, including wholesaling, retailing and manufacturing. In addition to enjoying overall improvement, the perception participating firms hold of both the current and future economic climate strengthened.
Free Reports:
Get Our Free Metatrader 4 Indicators - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter
Get our Weekly Commitment of Traders Reports - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.
Since Germany came close to recession last quarter, the robust data helped support the idea that the nation’s recovery is picking up steam, according to Reuters. In addition, the U.S. services industries grew more slowly than expected in November, according to preliminary figures supplied by Markit Economics and reported on by Bloomberg.
Draghi’s pledge
European Central Bank President Mario Draghi recently emphasized the importance of increasing inflation in the region and said he would take action to ensure that this key economic indicator accelerated as soon as possible.
Robert Pavlik, chief market strategist for Banyan Partners LLC in New York, spoke with Bloomberg about the impact Draghi’s statements, as well as the latest PBOC stimulus, are having on the market.
“We’re seeing a carryover from last week’s comments made by Draghi trying to address the inflation in Europe, and the actions from the Chinese central bank to lower lending rates,” he told the news source. “You’ve gotten some good economic news and earnings reports. The market has more upside potential.”
Weidmann voices doubts
While Draghi has stated his commitment to increasing inflation, Jens Weidmann – who heads up the Bundesbank and serves on the ECB’s Governing Council – expressed his doubts, according to Reuters. If the euro zone’s central bank uses any further measures to help alleviate the problem of low inflation, it could run into legal restrictions, he said.
“It looks like there’s some discord within the ECB before its Dec. 4 meeting and a step down from government bond purchases,” Christopher Vecchio, currency analyst at FXCM in New York, told the news source.
Investors who want to take part in forex trading should know that since the Federal Reserve has eliminated its bond purchases, and is expected to bolster its rates soon, any additional monetary stimulus harnessed by ECB could easily cause the EUR/USD to push lower.
The post EUR/USD Rises amid Regional Economic Developments appeared first on | HY Markets Official blog.
