Market Overview

Euro (FXE) rallies On ECB Comments


The Euro (EUR) rallied today to close the week with significant gains across the board after hawkish comments by European Central Bank executive board member Lorenzo Bini Smaghi triggered speculations among investors that a rate hike might be coming sooner than previously thought.

Bini Smaghi said that correction could be needed in the monetary direction as the European economy recovers and, at the same time, inflation starts to raise its head around the world. He especially underlined rising prices in commodities, which would definitely have an impact on inflation in Europe down the road.

After the comments, the European single currency skyrocketed against each of its major counterparts, including the US Dollar (USD), British Pound (GBP), Japanese Yen (JPY) and others.

The EUR/USD soared from 1.3560 to as high as 1.3713, but was not able to hold above 1.37 and eventually closed the week at 1.3684, still a significant gain from last week's close at 1.3546. The EUR/GBP, meanwhile, jumped from the intraday lows of 0.8357 to 0.8432 and the EUR/JPY currency pair moved from 112.90s to close the week at 113.71.

Posted-In: Forex Global Economics


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