The EUR extended Friday's gains versus the Dollar following the release of Friday's unexpected drop in U.S. Non Farm Employment data for December. Monday in New York, the EUR was at $1.4524 from $1.4414 late Friday and at Y133.78 from Y133.48. The U.K. Pound was at $1.6112 from $1.6034
The Dollar's decline versus the EUR intensified Monday on speculation investors will increase carry trades with the greenback as the funding currency. Carry trades are trades in which investors sell a certain currency with a relatively low interest rate and use the funds to purchase a different currency yielding a higher interest rate. The U.S. benchmark rate of zero to 0.25% and the Dollar has become a popular choice for a funding currency along with the JPY. With the recent negative U.S economic data dampening expectations of imminent interest increases and an increase in risk appetite, demand for growth sensitive currencies such as the EUR and Australian and New Zealand Dollars is fueled at the expense of the U.S Dollar.
With no news expected from the Euro-Zone today, the EUR's movements will likely be determined by movements in equities as well as news from the U.S. the release of the U.K Trade Balance at 9:30 GMT is likely provide some direction to the Pound, possibly pushing it higher versus the Dollar as it is expected to show improvement.