Euro Slides As Dollar Rises

The euro slipped lower on Friday morning as markets eased back into full swing following the Christmas holidays. The common currency traded at $1.292 at 8:45 GMT, weighed down by encouraging US data.

 

Before the holidays, the US released a host of data which reinforced speculation that the nation’s economy was back on solid ground. GDP figures showed that the US economy grew 5 percent in the third quarter, while labor market data showed that the number of Americans claiming unemployment benefits had fallen by 9,000 last week. 

 

The robust data added to speculation that the Federal Reserve is gearing up to raise interest rates. At last month’s meeting, Fed Chair Janet Yellen remarked that rates would stay low for the next “couple” of meetings, leading investors to infer that the bank will raise rates at its third meeting in 2015.

 

Meanwhile, most are expecting the European Central Bank to move in the opposite direction come 2015. The region is plagued by political instability and poor financials, which have contributed to the euro’s weakness.

 

The region is also suffering the effects of the ongoing trouble in Ukraine, where rebel groups are still unable to come to any agreement with nationalist forces. The Wall Street Journal reported that meetings in Minsk resulted in the two sides agreeing to swap some prisoners, but little else. They are set to meet again in order to agree on a firm cease-fire agreement as 1300 people have been killed since the two agreed to lay down their weapons in September.

Posted In: NewsEurozoneCommoditiesForexGlobalFederal ReserveMarkets
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