The Euro dipped slightly today after Friday's rally and the market's focus now shifts today to latest data on European and U.S. manufacturing sectors
The Euro dipped earlier today, as investors searched for new reasons to extend a rally initiated by euphoria concerning the latest European leader's push to solve the region's debt crisis.
On Friday, the Euro zone leaders had agreed to have their rescue fund provide aid directly to stricken banks from 2013 and also to intervene on bond markets in order to support troubled members.
The EU leaders went even further towards banking union, when they pledged to create a single banking supervisor.
The agreement then triggered a rally in Italian and Spanish government bonds and the Euro shot up nearly 1.7% on the day, its largest one day percentage gain in eight months.
While many analysts expect that the Euro's rally may be sustained for a while longer, many others doubt its sustainability. Some have cautioned against reading too much into the Euro zone bond market's reaction on Friday and expect some of the gains to be given back.
Over the course of the month, one could expect to see the Euro run into resistance from weak economic data and move down as officials haggle over the details of the EMU summit.
A near term risk for the Euro, is the European Central Bank's interest rate decision which is due this Thursday. There is an expectation that the ECB may cut interest rates by 25 basis points to 0.75% and a rate cut will almost certainly be Euro negative.
Data is due out today that may show that the Euro bloc's jobless rate has climbed to a record figure, expected to be in the vicinity of 11.1% in May from 11% in April, and that manufacturing figures are down.
The Euro slid 0.3% to $1.2625 earlier today and had slipped 0.3% to 100.72 Yen, having jumped 2.2% versus the Yen in its biggest one day rise against the Yen in 15 Months on Friday, as there was some profit taking by hedge funds.
The market's focus now turns to the latest data on European and U.S. manufacturing sectors. China had announced yesterday that its factory activity had slowed to seven month lows in June however, this figure was not as low as initially feared.
The Euro dipped earlier today, as investors searched for new reasons to extend a rally initiated by euphoria concerning the latest European leader's push to solve the region's debt crisis.
On Friday, the Euro zone leaders had agreed to have their rescue fund provide aid directly to stricken banks from 2013 and also to intervene on bond markets in order to support troubled members.
The EU leaders went even further towards banking union, when they pledged to create a single banking supervisor.
The agreement then triggered a rally in Italian and Spanish government bonds and the Euro shot up nearly 1.7% on the day, its largest one day percentage gain in eight months.
While many analysts expect that the Euro's rally may be sustained for a while longer, many others doubt its sustainability. Some have cautioned against reading too much into the Euro zone bond market's reaction on Friday and expect some of the gains to be given back.
Over the course of the month, one could expect to see the Euro run into resistance from weak economic data and move down as officials haggle over the details of the EMU summit.
A near term risk for the Euro, is the European Central Bank's interest rate decision which is due this Thursday. There is an expectation that the ECB may cut interest rates by 25 basis points to 0.75% and a rate cut will almost certainly be Euro negative.
Data is due out today that may show that the Euro bloc's jobless rate has climbed to a record figure, expected to be in the vicinity of 11.1% in May from 11% in April, and that manufacturing figures are down.
The Euro slid 0.3% to $1.2625 earlier today and had slipped 0.3% to 100.72 Yen, having jumped 2.2% versus the Yen in its biggest one day rise against the Yen in 15 Months on Friday, as there was some profit taking by hedge funds.
The market's focus now turns to the latest data on European and U.S. manufacturing sectors. China had announced yesterday that its factory activity had slowed to seven month lows in June however, this figure was not as low as initially feared.
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