Thursday July 22, 2010 - 20:20:58 GMT
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Forex Hound - www.forexhound.com
Strong Industrial Data Drives Euro Higher
The U.S. Dollar is trading lower across the
board as trader demand for risky assets soared following the news out of Europe. The release of the bullish industrial report
combined with Bernanke‚Äôs dovish tone sends a signal to investors that the
European Central Bank is moving closer to a possible rate hike while the Fed is
still struggling with the possibility of a double-dip recession. Furthermore,
the bullish Euro Zone numbers is a sign that the ECB is likely to refrain from
applying additional stimulus measures while the weakening U.S. economic data means the Fed is
likely to consider a second round of quantitative easing.
The strong rise in the Euro is spreading to
other currency markets as traders position themselves for a weaker U.S. economy.
Traders are demanding higher yielding assets as they anticipate the Fed leaving
interest rates lower for a much longer period of time than previously
estimated. U.S. Treasury Bond traders are pricing in the possibility of a Fed
rate hike for September 2011. The bullish news about the Euro Zone and the
dovish outlook for the U.S.
economy is especially bullish for commodity-linked currencies.
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