Euro is higher today, even though there has been further economic contraction in the eurozone. The fact that the eurozone appears to be moving toward recession isn’t holding the euro back today as Forex traders consider disappointing US economic data, and look for clues that European leaders and the ECB are really ready to take action on the financial crisis in the eurozone.
Euro still has the upper hand today, even though the economic situation continues to move toward recession. According to Markit Economics, a purchasing managers index rose from 46.5 to 46.6 in July. Even though that is a rise, the fact is that it is still in the contraction zone. As a result, the 17-nation currency zone remains on track for a recession.
On top of that, it appears that Chinese manufacturing may be picking up the pace for its contractions, and US jobless claims for the week ending August 18 show an increase. All of this difficult news, pointing to a global economic slowdown, should weigh on the euro, but it isn’t. Euro is gaining against the US dollar for now, likely on the idea that European leaders and the ECB will finally act to secure the future of the euro.
At 12:45 GMT EUR/USD is up to 1.2555 from the open at 1.2529. EUR/GBP is up to 0.7909 from the open at 0.7890. EUR/JPY is up to 98.7275 from the open at 98.4535.
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