RTTNews - The euro edged higher against its lower-yielding rivals as a better-than-expected GDP report in the U.S. fueled hopes of an economic recovery.
The European currency added to recent gains against both the dollar and yen amid higher risk appeal. On the other hand, the euro hovered near a monthly low against the sterling.
On the economic front in the Eurozone, consumer price inflation stayed negative for the second month in July with the latest decline being the biggest on record, extending support to a low interest rate regime. Unemployment reached the highest level since June 1999 as more employers cut headcount in June.
The euro climbed above 1.4250 in mid-day trading against the dollar, moving within a cent of its 2009 high. The European currency slipped to a two-week low of 1.4006 earlier this week.
The U.S. Commerce Department revealed gross domestic product fell 1% in the second quarter. Economists had expected GDP to fall at a 1.5 percent pace. This follows a 6.4-percent contraction in the first quarter.
The euro was choppy against the sterling and moved near its overnight levels around 0.8530 in the early afternoon. The European currency lingered near a monthly low from yesterday.
The euro edged to a three-day high of 135.54 against the Japanese yen, extending the mild rally that began on Wednesday. If the European currency reaches above 136.08 it will reach a monthly high.
In Japan, the seasonally adjusted headline Nomura/JMMA Purchasing Managers' Index or PMI rose to 50.4 in July from 48.2 in the previous month, the first improvement for seventeen months. A PMI reading above 50 indicates expansion in the sector.
On the economic front in the Eurozone, a flash estimate from the European Union statistics office, Eurostat, revealed a 0.6% annual fall in consumer prices in July compared to a 0.1% drop in June. The decline in July was the biggest on record. Prices also dropped more than the expected 0.4%.
Inflation turned negative for the first time in June. The European Central Bank aims at inflation rates below, but close to 2% over the medium term.
Friday, the European Commission approved EUR100 million to Serbia as general budget support to help with the stabilization of the country and ease the economic and social consequences of the crisis.
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