The Euro has made gains against the majority of its peers despite many investors believing that the European Central Bank will cut its main policy rate on Thursday, an outlook that would normally cause them to sell their Euros.
Instead of a selling of the single currency it is on the rise, coming close to a two-week high against the US Dollar late on Tuesday. It increased by 1% since April the 17th when speculation was boosted over a rate cut after the head of the German Central Bank the Bundesbank told the Wall Street Journal that the ECB could adjust rates if it felt the need.
Following Tuesday’s release of new record high unemployment in the European Union and with little sign of economic improvement expectations of a cut have increased rapidly. Investors buying Euros are betting that the ECB will signal a rate cut as it looks for ways to boost economic growth. Many economists are expecting the Central Bank to cut rates by 0.25% to 0.5% a new record low.
“The rate cut will potentially help stabilize growth, and the strength in the euro is reflecting that,” said Anjun Zhou, who helps manage $33 billion at Mellon Capital Management.
If the ECB doesn’t do what the market is predicting then the Euro could fall sharply. So far ECB officials have resisted calls to follow the example of Japan and the US and cut rates to near zero. The Bank’s leaders say that spurring on growth is the job of elected officials in individual governments. Several economists doubt that a rate cut would do much, if anything to boost growth.
A rate cut could also fuel more demand for higher-yielding European bonds, whose popularity with investors has kept the Euro elevated over the past month.
Current Euro (EUR) Exchange Rates
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3184
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8481
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.2732
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.5395
The US Dollar/Euro Exchange Rate is currently in the region of: 0.7584
The Pound Sterling /Euro Exchange Rate is currently in the region of: 1.1791
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.7854
The New Zealand Dollar/Euro Exchange Rate is currently in the region of: 0.6495
(Correct as of 11:35 am GMT)
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