By Rita Ruvinski – The European currency rose against the Japanese yen Friday as strong Chinese economic data fueled optimism about the global economic recovery, to the detriment of the safe-haven, low-yielding Japanese currency. EUR climbed to intraday high of 130.73 yen; after data showed Chinese industrial production rose 19.2% from a year earlier in November.
Against the U.S dollar the EUR headed for a 2nd weekly decline, the longest stretch in 2 months, on speculation the credit ratings of more European nations will be lowered. The Euro-Zone currency continued to struggle as markets fretted about the weaker links in the European economy, including Greece and Spain. Fitch dropped the credit rating this week below the single-A bracket for the first time in 10 years while Standard & Poor’s cut Spain’s outlook to negative.
The British pound, which has been under pressure from concern about Britain’s fiscal position, gained 0.2% o $1.6313 and climbed 1% to 145.20 Yen. While the U.K. is lagging the Euro-Zone and U.S. in exiting the recession, reports are showing signs of a recovery. U.K. consumer confidence stayed close to the highest level in 1 1/2 years in November according to Nationwide Building Society.
Still, the GBP remains in a weakening trend and is still very much vulnerable. The U.K currency slipped already 0.1% against the Dollar and dropped 1.9% the common European currency in November as the U.K. stayed mired in the recession in the 3rd quarter. In addition to the ongoing recession, the heavy deficit and a possible expansion of the QE program, may hurt the Pound some more. The stronger U.S dollar that was seen this week doesn’t help the Pound either.
Forex Market Analysis provided by Forex Yard.
© 2006 by FxYard Ltd
Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.
