Euro Strikes Back, Eliminating Previous Week Losses against the Greenback - 13.8.2012
The common currency advanced against the US dollar on Monday as market participants hope that European central bank will take further steps to reduce Spain’s borrowing costs. However the Euro remains unstable due to possible European policy maker’s disagreements. Earlier today it was announced that the Greek GDP growth fell by 6.2% in the second quarter of 2012 while consensus was around minus 7% growth. Moreover, the Wholesale Price Index for Germany surprisingly rose by 0.3% in July up from 1.1% decrease in June. The latest better than expected news and increasing hopes of ECB’s plan to buy sovereign bonds from indebted countries reduced yields, Spanish 10-year yields dropped to 6.84% from 7.01% and Italian 10-year bonds fell slightly to 5.85% from 5.92%. The Euro jumped by 0.72% against the greenback from the time the FX market opened today, from 1.2269 to 1.2358. The EURUSD penetrated the resistance at 1.2316 triggering further gains, possible next resistance at 1.2386.