European Commission Likely To Propose German Review
The euro slipped back below $1.34 on Tuesday morning after the common currency modestly recovered when investors took profits on the rising dollar.
The euro couldn't hold on to Monday's gains for long as many have begun to speculate that the US Federal Reserve will begin to cut back on its stimulus spending as soon as December.
A surprisingly upbeat jobs report from the US last week sparked new taper talk as the central bank has said in the past that its taper will be tied to growth in the labor market. On Friday, data showed that US companies added 204,000 jobs in October; far surpassing forecasts for an increase of 125,000 jobs. Even more encouraging was the fact that the data reflects the time during the US government shutdown, which many believed would hamper the region's recovery.
In the eurozone, falling inflation figures have many worried that the bloc's fragile recovery will fall through. However, eurozone policymakers are pressing on with the reforms needed to ensure the region doesn't fall into another economic crisis.
The Wall Street Journal reported that the European Commission is planning to exercise its new power to police the bloc's macroeconomics and help remedy imbalances between member states. At the Commission's meeting on Wednesday, an in-depth review of Germany's economy is expected to be approved due to recent criticism of the nation's current account surplus of more than six percent of GDP.
Under EU rules, a six percent current account balance is considered “excessive” and many, including the US Treasury, have criticized the country for undermining the rest of the region's recovery. The review will likely strain the relationship between Brussels and Berlin and could last for several months.
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