Daily Forex Round-Up: Euro (EUR) up vs. Dollar (USD) for a Seventh Day

on Dec 18, 2012

The euro rose for a seventh consecutive day against the dollar, the single currency’s longest winning streak in almost 20 months, Bloomberg reported on December 18. The yen, which on Monday slid to multi-month lows against the dollar and the euro, was week on Tuesday as well, ahead of the policy meeting of the Bank of Japan, with incoming Prime Minister Shinzo Abe pressing policy makers to increase stimulus and double the inflation target.

**Euro Continues to Gain Ground against the Dollar**
Bloomberg reports that the euro gained 0.1 percent against the greenback to trade at $1.3183 at 8:58 a.m. EST, posting the longest winning streak since April 2011. The single currency also advanced by 0.1 percent versus the yen to ¥110.59.
The euro’s gains during the last few days have been prompted by optimism related to the US budget talks, which spurs appetite for riskier assets. “One of the reasons you’re seeing relative resilience in the euro, we’re awaiting news from the budget talks so that is limiting movement and the news we are getting seems favourable so that’s helping equities, foreign currencies and hurting the dollar,” pointed out Nick Bennenbroek, head of currency strategy at Wells Fargo & Co (NYSE:WFC), as quoted by Bloomberg. “If we get some agreement, we avoid the worst case for the US economy and the markets.”

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The single currency was also supported by positive news from the Eurozone periphery, with Spain and Greece meeting their targets at bill sales.
**Yen Extending Decline against Majors**
The yen was unsurprisingly weak on December 18, with Reuters reporting that the dollar was up 0.1 percent to ¥83.98, near the ¥84 level hit on Monday. The Japanese currency has been declining since the victory of the Liberal Democratic Party (LDP) whose leader Shinzo Abe has repeatedly signalled that he would pursue more aggressive monetary easing by the BOJ, which is scheduled to start a policy meeting on December 19.

“We are in a situation where we will see the government tell the central bank what to do. Such a politicised situation is never good for a currency, and the yen will weaken,” noted Peter Kinsella, a Commerzbank (FRA:CBK, ETR:CBK, PINK:CRZBY) currency strategist, as quoted by Reuters. “Apart from the politics, the economic data from Japan has not been good. This should see quite aggressive easing from the BOJ. We are forecasting 90 yen over the coming year.”

**Sweden’s Krona (SEK) Strengthens**
!m[](/uploads/story/1057/thumbs/pic1_inline.png)On December 18, Bloomberg reported that Sveriges Riksbank reduced its rate by a quarter of a percentage point to one percent. Sweden’s central bank, however, signalled that it probably would not cut interest rates in 2013, with the news supporting the krona which advanced 0.3 percent to 8.7320 per euro, and gained 0.4 percent to 6.6269 per dollar. Riksbank, however, warned in a press release that the “weak developments” in the Eurozone were “having a clear effect on the Swedish economy.”

**Real (BRL) Edges Up**
Brazil’s real, which on Monday lost 0.2 percent against the US dollar, advanced on December 18. Reuters reports that the real rose 0.1 percent to trade at 2.0939 per dollar, following the auctions of Brazil’s central bank to sell as much as $1.5 billion on the spot market with repurchase agreements, in an attempt to provide liquidity to the foreign exchange market and boost the domestic currency.


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