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Euro Rises on Rate Expectations
After initial adjustment and volatility all the major pairs slowly went bid against the dollar with EUR/USD rising above 1.2735 and GBP/USD hitting 15 day highs at 1.8950 as traders made bets that interest rates spreads between the greenback and its key trading partners will narrow as 2006 comes to a close
In economic news today Euro-zone Current Account deficit widened more than expected as income earnings dropped by 9 Billion euros from 40 Billion to 31 Billion in the month of July. Over the past 12 months EZ Current account deficit has accumulated to more than 40 Billion euro - still a tiny 0.6% of the GDP, but a troublesome trend nevertheless. The news took some steam out of the early morning rally and the pair essentially marked time ahead of the US Open as traders looked to LEI data and Philly Fed numbers for further directional clues.
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