Euro Extends Gains After IFO Report

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TradersDNA

Better-than-expected business sentiment data from Germany saw the euro push higher against most major currencies. The IFO report contained data that beat both the estimates and the previous month’s data. Current Assessment rose to 112.2, Business Climate was up to 109.3, while Expectations was up to 106.3. This shows that the German economy is running smoothly, despite wider problems in the eurozone.

The report saw the euro hit a near four-year high against the yen of 136.60 in the immediate aftermath, continuing a recent rally that has seen the yen fall dramatically against the euro.

EUR/JPY Nov 22 2013Source: FXstreet
EUR/JPY Nov 22 2013
Source: FXstreet

The euro had been in the doldrums in midweek after reports that the ECB was considering negative deposit rates, but these reports were played down by central bank president Mario Draghi, lending support to the single currency.

The euro also rose above the 1.3500 mark against the US dollar, hitting a 2-day high of over 1.3520, and seems to be on its way to hitting the intraweek high of 1.3580 reached on Tuesday.

Meanwhile, the dollar fell from a four-and-a-half-month high of 101.36 yen against the yen as investors took profits after a rally that has lasted for over a month, falling 0.1% at 101.03 yen.

Comments from the Bank of Japan Governor Haruhiko Kuroda, who said the economy is growing in line with the bank’s projections and that the 2% inflation goal will probably be achieved by 2016 saw Japanese stocks hit six month highs. The Nikkei and the yen have been moving conversely for several months, with every rally in the share index prompting a yen sell-off, and a lower currency boosting exports and earnings, which further supports share prices.

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