RTTNews - The euro gained against the other major currencies Tuesday as an encouraging purchasing managers index report from the Eurozone led traders to bet the economy's recession could be nearing a bottom.
The European currency turned notably higher against the U.S. dollar, boosted by a slower-than-expected rise in U.S. existing home sales. The euro also bounced off of a multi-month low against the sterling and multi-week low against the yen.
Also Tuesday, European Central Bank Executive Board Member Lorenzo Bini Smaghi said the central bank will not allow inflation to resolve budget problems and warned authorities to frame exit strategies and not to wait for further central bank rescue. Governing Council Member Christian Noyer said the central bank must be ready to absorb excess liquidity as soon as necessary.
Investors are also looking forward to the Federal Reserve's interest rate decision tomorrow. The Federal Open Market Committee's two-day meeting began today.
The euro rose to an 11-day high of 1.4086 against the U.S. dollar, erasing modest losses from yesterday. In overnight deals, the 16-nation currency moved as low as 1.3827.
A National Association of Realtors report showed that existing home sales rose 2.4 percent to an annual rate of 4.77 million units in May from a revised 4.66 million units in April. Economists had expected sales to rise 3 percent to 4.82 million units from the 4.68 million units originally reported for the previous month.
The euro rose to 0.8587 against the sterling, climbing away from yesterday's multi-month low of 0.8399. If the currency gets past 0.8604, it will reach a 13-day high.
Tuesday, Spencer Dale, a Bank of England policymaker, said it is still early to judge the success of the asset purchase program in stimulating nominal spending, but initial indications remain encouraging.
The euro rebounded against the yen and moved near 134.00 in the early afternoon. The currency had reached its lowest level in about a month at 131.48 earlier in the day.
The Japanese Cabinet Office downwardly revised the leading index for April to 76.2 from 76.5. However, the index stood above 75.5 logged in March.
In the Eurozone, data released by the Markit Economics that a composite index for the euro area's manufacturing and services sector rose to 44.4 in June from 44 in May. That was the highest reading since September 2008. A reading below 50 indicates contraction in the sector. Economists had forecast for a reading of 44.9.
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