The euro ended the trading week as the strongest major currency amid receding fears of turbulent European politics and speculations that the European Central Bank will discuss quantitative easing tapering next week. By the end of the week, though, the currency softened a bit.
While the euro suffered the week before due to concerns about political turmoil in Europe, Italy and Spain in particular, such fears waned in the first half of this week. Meanwhile, comments from ECB officials led to speculations that the central bank may announce an exact date of stimulus reduction. There are downside risks for the euro, though, in case the ECB fails to announce a QE end. The currency also weakened by the weekend due to negative macroeconomic data.
At the same time, the US dollar was among the weakest currencies due to fears of trade dispute between the United States and its allies. Market participants were waiting for a Group of Seven summit this weekend, but so far news was not encouraging.
Among currencies of emerging markets, the Turkish lira was in focus this week. The Turkish central bank made another emergency interest rate hike to support the collapsing currency.
EUR/USD rallied from 1.1656 to 1.1767, touching the weekly high of 1.1840. EUR/JPY was up from 127.55 to 128.87, and its weekly high was at 130.27. EUR/GBP ticked up from 0.8728 to 0.8770, touching the high of 0.8838 during the week.
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