Euro Finds Strength In Positive German Data
The euro bounced on Thursday morning as the European Central Bank policy meeting neared. The common currency traded at $1.3519 at $5.15 GMT on Thursday after positive data from Germany quashed speculation that the bank would lower its interest rate this month.
The euro had a steep fall after data showed that the bloc's inflation was dropping dangerously low. The inflation figures were followed by even more dismal unemployment numbers which confirmed that the region's recovery was tepid at best. The poor data coupled with the US' divergent economic policy brought the common currency to new lows and prompted calls for the ECB to step in with further easing.
However, data released on Wednesday showed that German industry orders in September climbed and Germany's private sector growth was steady in October. The new data is likely to keep the bank from making any major policy changes until its December meeting.
Reuters reported that a poll showed most are expecting the bank to hold off on an interest rate cut, but some think the bank will still attempt to devalue the euro verbally. Many EU officials have been worried about the euro's recent strength as it has the power to drag down the bloc's fragile recovery by making exports less competitive. With that in mind, Bank President Mario Draghi could use verbal intervention in order to cut down on the currency's strength.
Investors will be watching the bank's press conference following the meeting to clues about the direction the eurozone is headed. Many are expecting the ECB to revise down its forecast for growth and inflation.
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