A batch of positive data was released from the U.S. economy yesterday and, as a result, the euro has strengthened. The positive data signaled that the U.S. economy is heading towards recovery, and investors took it as a positive sign for year 2011.
The direct impact was a boost to risk-appetite reflected in greater demand for higher-yielding assets. This has decreased demand for the dollar, and simultaneously boosted demand for the euro. The EUR/USD reached as high as the 1.3314 during yesterday’s session.
Another support for the euro came from Germany’s Chancellor Angela Merkel. Merkel stated yesterday that Europe stands, in these months, in the middle of a great test. Merkel claimed that the euro must be strengthened, adding that it is far more than a currency. Merkel said that the euro is the foundation of the German prosperity, and that German needs Europe and its common currency.
As for today, markets are expected to be relatively calm in light of New Year’s Eve.
Today’s leading news event appears to be the British Nationwide House Price Index (HPI), which is scheduled for 07:00 GMT. This report measures the change in the selling price of homes with mortgages backed by Nationwide. A positive indication is likely to support the GBP.
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Yan Petters is a top analyst of market trends who specializes in the forex market. Yan has a reputation for composing highly accurate analytical reports, both technical and fundamental. Yan Petters' ground-breaking perspectives on currency trends are highly valued by his colleagues and clients and has been a featured author on a number of influential trading sites. Yan Petters is an author for the ForexYard blog
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