Forex Trading – Eyes Are On Rate Decisions In Europe
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In the absence of fundamentals from the euro zone and U.K. and ahead of the release ISM non-manufacturing in the United States, Investors will be focusing on the rate decision on Thursday where the ECB and BoE are expected to leave the cost of borrowing unchanged at 1.00% and 0.50% respectively to boost growth amid the announced austerity measures.
President of the ECB Jean-Claude Trichet urged European economies on Monday to reduce spending to trim their budget deficits as this would enhance growth prospects, confirming that deficit cuts by governments will not affect growth.
Trichet’s announcement moves in line with the G-20 plans which involve cutting deficits to half by 2013. However, U.S. President is giving more attention to boosting growth to support recovery.
There are concerns that global recovery is waning after the slowdown seen in the U.S. and China and amid the looming debt crisis spreading in Europe.
A report released today by CME Group Inc. unit showed credit default swaps in 70 governments all over the world jumped 30% on average in the previous quarter due to the worsening fscal situation in Europe.
Today, Asian stocks climbed to the highest level in two weeks as investors deem that shares had become cheap compared with earnings forecasts.
In Europe, FTSE 100 Index inclined 86.48 points or 1.79% to 4910.01 points; CAC 40 Index climbed 72.39 points or 2.17% to 3404.85 points; and DAX Index added 91.75 points or 1.58% to 5907.95 points, as of 05:39 EST.
In the currency market, the euro bounced against the dollar to 1.2577 from the day’s opening at 1.2536, while the dollar retreated against a basket of major currencies as seen by the dollar index which slumped to 84.30 from the day’s opening at 84.53, whereas the British pound soared to 1.5192 against the dollar compared from the day’s low at 1.5079.
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