Wednesday, October 23, 2013
Euro Hits 2-Yr High Vs Greenback, 4-Yr High Vs Yen
TOKYO (NQN)--The euro is rising against the dollar and the yen Wednesday, as worries subside that sovereign debt problems will hurt the European economy.
After 12 p.m. Japan time, the single European currency briefly rose to 1.3793 dollars, its highest point in about two years. The euro also rose to 135.52 yen, roughly a four-year high. The euro is maintaining its momentum amid a continued, massive monetary easing in the U.S and Japan.
A manager with a foreign bond fund said the improving European economy is fueling buying of bonds issued by Southern European countries. The yield on newly issued 10-year Spanish and Italian bonds recently fell to the lower-4% level, narrowing the gap with German bonds. A massive amount of Spanish and Italian government debt will mature by the end of the year, but the countries appear to have already found additional funding. This gives an investors another reason to buy their bonds.
Inflation had been a concern in the euro zone, but it appears to be easing. The consumer price index rose 1.1% on the year in September, climbing at its slowest pace in more than three and a half years, while gross domestic product for the zone rose in the April-June, climbing for the first time in seven quarters.
In its Economic Outlook published Oct. 8, the International Monetary Fund, raised its estimate for GDP growth in the euro zone for 2013.
Japan's economy is expected to slow in the July-September quarter, due to weaker exports. In addition, U.S. jobs data point to a slower recovery, making Europe look comparatively stronger.
(Nikkei Quick News, Oct. 23)