Euro Heads Higher on US Economic Data

Euro is heading higher today, even in the midst of a deteriorating outlook for the eurozone. The risk appetite prompted by a better than expected jobs report out of the United States is helping high beta currencies around the world, never mind the fundamentals.

Earlier, the European Commission warned that the recession in the eurozone is expected to worsen, and the unemployment is expected to be a problem as well. This is in sharp contrast to the US economy, which saw more jobs than expected added in April, and a drop in the unemployment rate.
The European Commission expects that the eurozone unemployment rate will reach 12.2 per cent soon, and the growth forecast still indicates recessionary pressures — even though the rate of contraction appears to be slowing.
So, even though the eurozone faces serious hurdles, the euro is gaining ground today. General risk appetite, and a quest for yield, are supporting the euro on the Forex market, even though euro fundamentals are eroding and gold prices are struggling. It will be interesting to see what happens next, but for now the euro has the upper hand.
At 15:50 GMT EUR/USD is up to 1.3115 from the open at 1.3066. EUR/GBP is up to 0.8428 from the open at 0.8410. EUR/JPY is up to 130.0285 from the open at 127.9520.

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