Volatility sessions of euro currency
The euro currency observed a week on the high note. The euro is currently at the rate of 1.4062 against US dollar. This rate was up by 0.87% from the trading of the last week. Moreover the currency observed the upward change of 0.81% from the euro currency of last week.
But this week is likely to be volatile since the European Central Bank (ECB) is set to issue the most awaited interest rates for the euro zone. So the currency will depend on the bank’s decision and the market will react accordingly. The Economic Cooperation and Development (OECD), a European organization is pursuing the ECB to provide financial stimulus to the economy and asking the bank to provide zero borrowing costs for the economy. The major reason reflected here to cut interest rates is to check the onset of deflation in the economy. The CPI expected estimate of prices is negative 0.2% in June which is the lowest ever since 1991. The latest PPI report continues to build up the pressure on consumer prices in euro zone with forecasts predicting that wholesale inflation to dip by -5.6%. This can result in long term stagnation for the business and consumers in the economy.
ECB has put in various corrective measures to improve the businesses of the economy but in vain. They were inadequate in nature. It gave 442 billion euro in a year bank loan as a means to improve the liquidity crunch in the market and a bond buying scheme of 60 billion in the economy. But still it was unsure if the banks would extend the same benefits to the consumers since the banks reported to have losses around $1.1 trillion in the subprime crises of the global economy according to the IMF. Moreover Latvia also suffered the currency devaluation which will leave an impact on the euro currency.
But the figures of the economic confidence of euro zone sprang up in the month of June as the consumers are showing confidence after the efforts are being put up by the government for providing fiscal remedies. But after all these measures, it is still a doubt if the economy will continue to grow and sustain itself on its own after there is no stimulus. Moreover the number of people without job continued to rise and currently its rate rose to 8.3% in June being 8.2% in May. The German retail sales also dropped by 1.6%. Euro zone retail sales were down by 2.6% by the year end in May. So the traders are monitoring the current situation in the economy and are suggested to wisely invest. The currency till now bears a fundamental outlook of bearish trend.

The euro currency was floating at the current rate of 1.3942 which was
0.52% down from the last week’s trading in the European Union. But
however it was up by 1.03% as compared to the trading of last month.

But this week has a fundamental outlook of bearish trend. The
investors are still unsure about the strength of the euro currency and
unable to put in their confidence in its trading. But the finance
ministers of European Union are quite confident about the progress of
the currency and thinking that European Central Bank (ECB) should
start thinking on the price hike of the items and stop the financial
stimulus in the economy since the situation is far better under
control and the economy is showing the bright future prospects.

But investors are still not confident and any weak statement can fall
apart the economy. Since there is no such data’s expected this week
and moreover it will be on the speculators to judge the value of the
currency. The ECB has kept the lending rate at 1% which is very
minimal. But the leaders across Europe observe that the economy is on
the onset of revival and they can see the recovery. But still the
forecasts reveal that there will be a contraction of 4% in the economy
through the year 2009 and 0.3% slump in the other year.

In the G8 meeting, the US and UK governments discussed that they
should be focusing on economic recovery and should defer efforts to
deflate budget deficits until the recovery becomes more realistic and
feasible. Currently deficits are expected to be 6% of current GDP this
year and the government spending will be 5% of GDP. So the investors
have to still believe on the current figures and forecast and the
current global economic position. The euro currency is still dependant
on the current market trends rather than the global figures. It
reflects the global market trends of other currencies worldwide and
its major counterparts. Also euro is faring better due to rising
confidence of the investors and the financial stimulus injected by the
European Union to build in the consumer confidence.

The euro currency was floating at the current rate of 1.3942 which was 0.52% down from the last week’s trading in the European Union. But however it was up by 1.03% as compared to the trading of last month.
But this week has a fundamental outlook of bearish trend. The investors are still unsure about the strength of the euro currency and unable to put in their confidence in its trading. But the finance ministers of European Union are quite confident about the progress of the currency and thinking that European Central Bank (ECB) should start thinking on the price hike of the items and stop the financial stimulus in the economy since the situation is far better under control and the economy is showing the bright future prospects.
But investors are still not confident and any weak statement can fall apart the economy. Since there is no such data’s expected this week and moreover it will be on the speculators to judge the value of the currency. The ECB has kept the lending rate at 1% which is very minimal. But the leaders across Europe observe that the economy is on the onset of revival and they can see the recovery. But still the forecasts reveal that there will be a contraction of 4% in the economy through the year 2009 and 0.3% slump in the other year.
In the G8 meeting, the US and UK governments discussed that they should be focusing on economic recovery and should defer efforts to deflate budget deficits until the recovery is more tangible and global. Currently deficits are expected to be 6% of current GDP this year and the government spending will be 5% of GDP. So the investors have to still believe on the current figures and forecast and the current global economic position.

US Dollar:

US $ is said to be neutral for the coming week. There is also the possibility that the dollar will go down if the risk appetite of the investors return and there is discussion on deficits. The risk appetite of the people is said to be unknown due to the fact that if with the other markets the currencies market might turn for the better, the government might withdraw support and another bank might fall causing the markets to reverse. Also if the government progresses slowly towards growth and expansion, the other world markets might progress faster than the dollar causing it to devaluate. There are a couple of important speeches made in the coming week that might change the course of the dollar, like the speech of chairman Bernanke on the ongoing financial literacy or lack of it and the Federal reserve’s duke’s answer to the ongoing financial crisis.

EURO:

The forecast for the Euro looks bleak. It is expected to be bearish. This is due to the fact that the fundamentals of the growth of the Euro were not clear. The European economic data also looks uneventful. The levels of volatility in trading looks lower than expected and hence the Euro and Dollar will remain at the level it normally has been at. The Central bank is also not very keen in pursuing monetary stimulus. The Euro CPI data that is expected to be issued in the coming week could also determine the trend and movement of the Euro. All in all the lowering in prices will cause the interest rates to get revised and thus the Euro. The Euro however at the same time could move upward if the S&P index continues to give it good rating. The British pound could also devalue itself due to the CPI data and consumer sentiments.