Euro Rebounds on German Business Climate

The euro pared yesterday’s losses today after the report showed that the German business climate remained stable this month, giving hopes that the European Central Bank will increase the interest rates in June.
The Ifo Business Survey showed the Germany’s business climate index remained stable at 114.2. That’s good news as analysts predicted a decline to 113.9. The final estimate of Germany’s gross domestic product remained same as the preliminary estimates, showing that the German economy grew 1.5 percent in the first quarter of 2011 after it expanded 0.4 percent in the fourth quarter of 2010.
The good news renewed hopes for interest rate hikes by the ECB. Europe’s central bank raised its benchmark rates to 1.25 percent in April, but held it unchanged this month. Investors hope that the European economy will look good enough for the bank to increase the rates again.
EUR/USD advanced to 1.4094 from 1.4046 as of 22:41 GMT today, following the drop to the intraday low of 1.4001. EUR/JPY was at 115.59 after it opened at 115.19 and posted the intraday high of 116.17.

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