Euro decline vs. Dollar after London Olympic 2012

Euros clampedDominating Forex trading news is the Euro’s continued decline versus the dollar. The new low of 1.229 has hit many traders and this trend is predicted to continue for some time. The faltering of the Euro is seen to have been partially caused by fresh Greek unemployment figures, this data now showing that the number of jobless youths in Greece has hit a record high.

ECB monthly report

Additionally, the ECB’s monthly report paints anything but a promising outlook for the Eurozone. This report highlights a deepening recession and many analysts have lowered their growth forecasts. The figures released are a stark reminder of continued negative sentiment; GDP contraction revised downward 0.3% as opposed to an earlier forecast of 0.2%.

ECB bond purchasing program

While the ECB’s bond purchasing program is still seen as an effective means to alleviate temporary problems, the allusion that this program favors purchasing short-term bonds highlights the very real threat of contagion. Nonetheless, many still see these efforts as simply “buying time” in hopes of giving sovereign nations such as Spain, Italy and Portugal room to stabilise their economies. Many also feel that the ECB will continue its quantitative easing through the remainder of the year.

British Sterling development

Across the channel in Britain, investors have taken a similar cautious tone. There are hints that we may witness a slight consolidation of the Sterling as investors seek to hedge back from risk-oriented ventures. This comes as some see the Bank of England as somewhat inefficient in tackling the domestic economic downturn. The central bank may indeed be forced to expand their monetary policies to help combat what is now being perceived as protracted stagnation.

US Dollar index

Across the Atlantic, the US dollar index has traded moderately higher in comparison to the Euro. This, in turn, has weakened the price per ounce of gold amidst rather thin trading volume. Overall, there has been a lack of substantial market-moving news this week besides Greece’s unemployment data and the ECB revising its outlook for the Eurozone. These events underscore the undeniable fact that investors across the globe still lack overall confidence in the markets and will continue to view further Forex trading news with cautious eyes.

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