Euro Rallies as Italian-German Yield Spread Narrows

The euro rallied today but trimmed its gains against some rivals, including the Japanese yen and the Great Britain pound. The currency kept gains versus the US dollar and the Swiss franc, though.
Some market analysts attributed the rally to the pause in the rise of US Treasury yields, though it looks like by now Treasuries have resumed movement to new multi-year highs. Others explained the euro’s strength by the narrowing spread in the Italian-German bond yields, which indicates that concerns caused by the Italian budget eased a bit. But rating agencies will review Italy’s credit rating this month, and specialists predicted a downgrade, which will likely hurt the shared 19-nation currency.
As for macroeconomic data, Italian industrial production rose 1.7% in August from the previous month, seasonally adjusted, exceeding the average forecast of a 0.7% increase. French industrial production rose 0.3% in August, slowing from the July’s 0.8% rate of growth but exceeding the median forecast of an increase by just 0.1%. Furthermore, growth of manufacturing production accelerated from 0.5% in July to 0.6% in August.
EUR/USD climbed from 1.1490 to 1.1539 as of 15:58 GMT today. EUR/GBP was little changed at 0.8740. EUR/JPY was up from 129.79 to 130.50 intraday but backed off to 130.08 later. EUR/CHF jumped from 1.1393 to 1.1435.

If you have any questions, comments or opinions regarding the Euro,
feel free to post them using the commentary form below.

Leave a Reply

Your email address will not be published. Required fields are marked *