Finance Markets

November 28, 2006

Euro strengthens on growing money supply

Permalink: Euro strengthens on growing money supply

Filed under: Forex, USD, GBP, Euro, Economy, Yen

The euro strengthened again on Tuesday, helped by new data that showed the money supply in the Eurozone growing at an annual rate of 8.5 percent in October, above the 4.5 percent reference rate set by the European Central Bank. Meanwhile, two more French officials added their voices to recent French declarations that the euro was getting too strong and that Eurozone nations should have more say in ECB policy moves. Other Eurozone officials have not stepped up to support the French comments, and in fact the Austrian finance minister remarked that the euro’s strength is not special and simply is an indication of the Eurozone’s strong economy.

By mid-afternoon in New York, the shared currency was 0.2 percent higher against the Japanese yen, to ¥152.80, after hitting another all-time high of ¥153.06 earlier in the session. The euro reached its highest level in nearly two years versus the US dollar, at $1.3181, before dropping back a bit. Still, the dollar was 0.2 percent lower versus the euro to $1.3150, recovering a bit on existing home sales in the US in October that were better than had been expected. The greenback added 0.1 percent to ¥116.20.

Sterling was also stronger on the session, adding 0.4 percent to £0.6752 versus the euro and gaining 0.5 percent to $1.9480 against the US dollar, a two year high. The UK currency was helped by growth in house prices that were up at their best pace in almost a year and a half in October, and by a bid by Spanish utility Iberdrola for Scottish Power. Additionally, Gordon Brown said that the UK’s economy would grow more than had been expected this year.



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