Euro high versus dollar with strong German data

The German ZEW economic sentiment index jumped to 6.9, much higher than the -12 that analysts expected. This figure shows that investors are hopeful that Germany won’t enter a recession.

The euro suffered at the beginning of the week with news of the Italian PM’s resignation but the market is proving to be resilient. The euro rose as a result of the positive German data for the second day running on Tuesday. Further gains are expected to be made against the dollar if the Fed will add more aggressive easing.

The Fed will announce today its decision on whether it will replace its “Operation Twist” program with another bond-buying plan. If the Fed does indeed announce this, it’s going to be good news for the euro as there will be a negative impact on the dollar since treasury purchases will depress yields.

The Canadian and NZ dollar also rose against the US dollar with speculation for more Fed easing.

The US trade deficit figure which widened in October showing a drop in exports did not affect the markets.

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