Euro Bolstered by ZEW Report

http://www.interbank-fx.net/2009/04/euros-gains-limited/euro/The euro rose on Tuesday after falling to a one month low on Monday bolstered by a report showing increased German investor sentiment. A recovery in US stock markets also helped the euro dollar exchange rate. The US dollar is up more than 7% against the Euro as forex investors are betting that the US will be the first nation to recover from the global recession.

Gains Limited by Concerns About ECB Actions

The euro to dollar gains were limited by concerns about future ECB policies. The ZEW report which measures German investor confidence posted the first positive results since 2007. In mid day trading the euro dollar exchange rate was $1.2970 after hitting a one month low on Monday of $1.2883. Gains in the euro dollar rate are expected to be limited due to uncertainty about what monetary policies the ECB may or may not adopt. Dustin Reid of RBS Global Banking & Markets, stated, “Mixed signals by the ECB are at best putting a lid on euro gains and at worst, hurting it. Risks remain on the downside for the currency.”

IMF Report Pares Gains

The ECB is widely seen as behind the United States in addressing the recession and credit crunch and this has put pressure on the euro dollar exchange rate. The euro dollar rate was also affected by an IMF report that said that banks must write down $4 trillion in toxic assets before the global economy stabilizes.

Geithner Speaks

U.S. Treasury Secretary Timothy Geithner said that difficulty in placing a value on toxic assets is hindering banks ability to lend and borrow. Many forex traders and investors are concerned about the health of the financial sector and this has placed even more pressure on the euro dollar rate. At present investors are waiting to see just what actions the ECB will take.