On Thursday, the euro again edges higher against the US dollar and the currency follows its usual rise-fall trend, again this week. On the other hand, the Australian dollar slipped to its one-month low position, amidst growing concerns about the outlook for China. Since China is the biggest export market of Australia, the China outlook report worried the investors making the currency to shift downwards. The euro witnessed a jump of 0.2 percent and reached to $1.2556 which is much closer to its seven-week high position of $1.2590 that the currency had attained last week. On the other hand, the Australian dollar slipped to $1.0318 to its one-month low position, facing 0.1 percent jolt from its $1.0338 value.
The speech by U.S. Federal Reserve Chairman Ben Bernanke is supposed to trigger the rise of the euro. The currency also gained strengths because of Chinese Premier Wen Jiabao’s that statement in which he hinted to continue buying bonds of the European nations after assessing the associated risks. The Chinese news agency Xinhua has published the Chinese Premier’s this statement which is supposed to work in favor of the euro.
Investors are however quite upbeat on the statement made by Bernanke at a symposium in Jackson Hole. The prospects of the Fed’s asset buying program gave a positive signal to the investors and they are expecting a quantitative easing of the currency in the next month. If Federal Reserve takes such an action next month, it will work to revive the euro further, feel many market analysts. However, many global analysts feel on the contrary that Bernanke didn’t give any strong hints. But investors are little wary of the risk that the Fed action or inaction may bring to the currency. Many market experts however believe that Bernanke’s statement may work to make dollar face a strong selling trend. And this uncertainty may make dollar’s buying difficult in such a circumstance.
The euro gained support with the expectations that the European Central Bank will come up with significant schemes to revive the currency. It’s been expected that the ECB will reveal its plan next week to reduce the borrowing costs in Spain and Italy to bolster euro’s position in the market. The ECB is meeting on Sept 6 for taking some concrete steps in order to control the deepening debt situation in the euro zone.
In yet another development, the yen seemed to be little affected by the Japanese political situation. Just a day ago in Japan, the opposition got a control over the upper house and a censure motion was passed against the Japanese Prime Minister Yoshihiko Noda. This means that the opposition will likely to oppose all bills, including the financial bills, trying to stall all major financial proposals put forth by the Japanese government. But the Japanese currency seems to be little affected by the country’s political developments and still maintains its current value level against the US dollar. While on the other hand, the dollar recorded a 0.1 percent dip to 78.64 yen.