European Stock Markets
A round of strong German regional inflation
readings that bolstered expectations for a rebound in the country’s
consumer price growth has sent the euro climbing to session highs in
mid-morning action in Europe
The common currency was recently up 0.37 per cent at $1.1883 just after a batch of inflation data. It has since eased back to $1.1867.
A series of reports by Germany’s Federal Statistics Office showed that the year on year pace of price growth in four states picked up steam in November. That has sharpened expectations for a pick up in the overall inflation rate in Germany, the eurozone’s biggest economy, after a disappointment in October.
The euro has climbed 2 per cent on the buck this month, bringing its gains this year to 12.8 per cent, according to FactSet data. Investors have grown increasingly bullish on the shared currency thanks to the improvement in the bloc’s economy. In fact, bullish bets by US derivatives traders — seen as a proxy for the $5tn a day global currencies market — have come within 4 per cent of three-year highs, according to an analysis by Société Général
The weakness of the dollar this year has come as a surprise to many Wall Street investment houses, which came into the year expecting Federal Reserve rate rises would provide the world’s reserve currency with a tailwind.
But political upheaval in Washington, coupled with persistently tepid inflation readings in the US, has kept pressure on bond yields.
The spread between 10-year Treasuries and German Bunds of the same maturity, an important factor for currencies traders, has actually fallen from 2.19 percentage points at the start of 2017 to 1.97 percentage points today.
The common currency was recently up 0.37 per cent at $1.1883 just after a batch of inflation data. It has since eased back to $1.1867.
A series of reports by Germany’s Federal Statistics Office showed that the year on year pace of price growth in four states picked up steam in November. That has sharpened expectations for a pick up in the overall inflation rate in Germany, the eurozone’s biggest economy, after a disappointment in October.
The euro has climbed 2 per cent on the buck this month, bringing its gains this year to 12.8 per cent, according to FactSet data. Investors have grown increasingly bullish on the shared currency thanks to the improvement in the bloc’s economy. In fact, bullish bets by US derivatives traders — seen as a proxy for the $5tn a day global currencies market — have come within 4 per cent of three-year highs, according to an analysis by Société Général
The weakness of the dollar this year has come as a surprise to many Wall Street investment houses, which came into the year expecting Federal Reserve rate rises would provide the world’s reserve currency with a tailwind.
But political upheaval in Washington, coupled with persistently tepid inflation readings in the US, has kept pressure on bond yields.
The spread between 10-year Treasuries and German Bunds of the same maturity, an important factor for currencies traders, has actually fallen from 2.19 percentage points at the start of 2017 to 1.97 percentage points today.
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