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The euro surged Monday.
Written by article default Monday, 14 June 2010 20:08
Market OverviewThe euro surged Monday on the back of strong euro-zone economic data that helped cast aside lingering worries of the region's sovereign debt crisis.
The euro has declined more than 15% against the greenback since the start of 2010 as investors have worried over the sovereign debt of stressed member states, and the euro-zone's response to the crisis has oftentimes failed to appease those worries.
Industrial production figures for April showed the sharpest year on year increase at 9.5% since the euro zone began keeping such data in January 1990, sending the common currency sharply higher and setting a positive tone for currencies closely tied to global growth, such as the Australian and New Zealand dollars, which both gained more than 1% on the greenback.
The U.K. pound was lifted by the better than expected euro-zone data and a U.K. report that cut the government's borrowing forecasts, though the U.K. report also noted downward revisions to future growth.
The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 86.362 from 87.508.
CAD is stronger this morning on broad improvement in risk sentiment, with USD just notching a session low at 1.0259, its lowest level since May 18.
Market expectation
So far, data in the euro zone has held relatively well despite renewed growth risks, as the countries that use the common currency struggle to slash government spending, said strategists.
After soaring through key technical levels, the euro next could go as high as USD1.2385, said traders.
Monday's rally could last a few sessions. However, some analysts continue to believe that over the next month we will see a new low in the euro, generated by another spike in risk aversion and ongoing fears over the outlook for the EU generally, and potential for stress in the weaker members to increase, said analysts.
USDCAD pair will likely find decent bids ahead of the CAD1.0250 area while any moves back towards CAD1.0325 should find initial selling interest, said analysts.