Thursday, 8 September 2011

Euro Advances as Stocks Rally. Future Still Looks Uncertain

The euro rose against the U.S. dollar and the Japanese yen as stocks advanced on speculation the European Central Bank will cut interest rates, but the gains of the common European currency is limited due to concerns about the financial crisis in the region.

Market participants speculate that ECB President Jean-Claude Trichet, refuse to reduce borrowing costs, increase the supply of cash to the bank in the euro zone in place. Many economists are worried about that possibility, believing that the current state of the European economy can not allow the current level of interest rates and fees should be reduced. Investors were relieved or less like the political leaders of the European Union are delaying its plan to incur losses for holders of European equities, but the plan was postponed just is not rejected.

Stocks were rallying despite all the concerns, support for the euro. The Stoxx 600 gained as much as 3.1 percent, to 228.84. UK FTSE 100 up 3. 1 percent, showing the largest increase since May 2010, while Germany's DAX index rose 4.1 percent and France's CAC 40 rose 3.6 percent.

EUR/USD jumped from 1.3993 to 1.4096 yesterday, but retreated today and traded at about 1.4071 as of 00:32 GMT. EUR/JPY on the previous trading session rose from 108.67 to 108.88 and remained near this level today.

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