Euro Down To $1.25 As Dollar Rises
The euro began the week slightly higher after falling Friday to a more than two-year low. The common currency traded at $1.2539 at 8:00 GMT as data from the eurozone and the United States highlighted the growing disparity between the two central banks’ policies.
Last week, eurozone data showed that the region’s forward momentum was waning despite the European Central Bank’s efforts to boost growth. The Wall Street Journal reported that while speaking on Thursday, ECB president Mario Draghi admitted that recent figures have been disappointing, but that the governing council is still anticipating a recovery in 2015.
The eurozone’s Markit PMI figure dropped to 52.0 in September from 52.5 in August, below expectations for a 52.3 reading. The PMI data will likely put further pressure on the ECB to roll out a large-scale quantitative easing program despite resistance from some eurozone policy makers.
Meanwhile, the Fed has been moving in the opposite direction and reeling in its own quantitative easing program. Now, investors are eager to see how the bank will respond to the improving U.S. economy as many foresee an earlier than expected rate cut on the horizon.
On Friday, U.S. non-farm payrolls data showed that employers added 248,000 new jobs in September, a solid figure that suggests the labor market is on solid ground. The unemployment rate was at its lowest level since July 2008 at 5.9 percent in September, another encouraging sign.
The upbeat data has many betting that the Fed will begin to consider a rate hike sooner rather than later, with most expecting the bank to raise interest rates by mid-2015.
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