Euro Steady Above $1.24
The euro was little changed on Wednesday morning following modest gains on Tuesday due to Germany’s improving business sentiment. The common currency traded at $1.2475 at 5:30 GMT as the dollar picked up the pace following surprisingly strong GDP estimates.
Reuters reported that the U.S. Commerce Department increased its forecast for the nation’s GDP growth from 3.5 percent to 3.9 percent. The revised figure took into account more consumer spending as well as growing inventories. Investors took the new estimate as a sign that the U.S. economy will hold on to its strength despite the global slowdown in China and Europe, something that has been a worry for the United States.
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Meanwhile the eurozone continued to struggle with its own issues as both Ireland and Greece struggled with their budgets. In Ireland, the 2015 budget has been under scrutiny recently as many believe the nation should be working harder to reduce the government’s debt. Though the budget reduces the deficit to 2.7 percent, below the EU mandate, the IMF and the EU have said the nation could be doing more.
Greece is also facing some budgetary concerns as officials met with international inspectors on Tuesday to discuss how the nation will exit its austerity program. While Greece’s 2015 budget projects that the nation will reduce its deficit to just 0.2 percent of GDP, international inspectors have estimated the figure at around 3 percent of GDP. With that in mind, they’ve asked Athens to make an additional 1.8 billion euros worth of cuts, something Greek officials say will be impossible.
The budgetary issues in Europe are a constant reminder that the region’s economy is still feeling the effects of the financial crisis and have put pressure on the euro. While Germany’s unexpectedly optimistic business sentiment survey gave the common currency a boost on Monday, it wasn’t enough to overcome worries about other nations’ financial stability.
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