Euro Makes Modest Gains On Weak US Data
The euro made its way above $1.27 on Tuesday as the dollar weakened on disappointing data and the upcoming Federal Reserve policy meeting. The common currency traded at $1.2702 at 7:00 GMT, still weighed down by worries about stability in the region.
Reuters reported that U.S. service sector data contributed to the dollar’s loss on Tuesday morning as the figures were worse that expected.
The report showed that activity in the nation’s service sector dropped to a six-month low in October, something that could indicate stifled growth in the fourth quarter.
The data probably wont sway the Fed from ending its quantitative easing program at its two-day meeting, which begins on Tuesday. The bank is widely expected to cut off the final $15 billion worth of bond buying and allow the U.S. economy to stand on its own.
However, most are expecting the bank to maintain low interest rates for an extended period to keep markets from taking a sharp turn.
Meanwhile, the budget battle in Europe between the EU and Italy and France looks to be subsiding as both Italian and French policy makers agreed to meet EU guidelines.
After both nations submitted budgets that failed to meet EU mandated deficits, lawmakers from both countries said their economies were unable to make any further cuts and asked for leniency. Instead, Brussels responded by warning Italy and France that their budgets would be rejected if they were not revised.
French Finance Minister Michel Sapin and Italian Prime Minister Matteo Renzi backed down following the warning and pledged to meet budgetary requirements in separate letters to the European Commission.
Italy’s government plans to reduce its deficit by using a fund designated for tax cuts, while France plans to use additional revenue from anti-tax evasion efforts in order to bring down the nation’s debt.
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