EUR/USD Fundamental Outlook at 1500 GMT (EST + 0500)

  on

The euro moved lower vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4305 level and was capped around the $1.4440 level.  The common currency gained 2.52% in 2009.  Data released in the U.S. today saw weekly initial jobless claims improve to +432,000 from a revised +454,000 while continuing claims improved to 4.981 million from a revised 5.038 million the week before.  The common currency fell to three-month lows on U.S. economic recovery signs and an improved economic outlook from the Fed.  Some dealers believe the Fed is inching closer to removing more of its monetary stimulus measures.  Recently, the U.S. dollar has started to benefit from improving U.S. economic fundamentals, a reversal from earlier in the year when the greenback failed to markedly improve from better fundamentals.  In eurozone news, data released yesterday saw EMU-16 bank lending decline 0.7% m/m last month, the third consecutive month of declines.  Also, the EMU-16 leading economic index rose 0.7% to 107.1 last month following October's 0.6% gain and September's 0.9% gain.  Moreover, the EMU-16 M3 money supply fell by 0.2% y/y, far below the forecast.  The euro's share of global foreign reserves has risen to all-time highs according to the International Monetary Fund.  The euro's share of global foreign reserves is now at 27.7% whereas the U.S. dollar's weighting has falledn to 61.6%.  ECB member Mersch this week reported the eurozone economic recovery looks moderate and precarious.  In contrast, ECB member Kranjec reported there are signs the global economic crisis is over. ECB member Bini Smaghi reported global central banks should be able to adopt a more minor role in managing the economy next year and the real economy can take over again. Euro bids are cited around the US$ 1.3885 level.

Join the Discussion