As investors await the European Central Bank’s policy decision on Thursday, and with more easing anticipated from the ECB, the Euro skidded to a 27-month low versus the strengthening U.S. Dollar. The greenback also touched a 7-year high versus the Japanese Yen after Federal Reserve officials highlighted the rosy outlook of the American economy which gave rise to increased speculation that the Fed is likely to raise interest rates by the middle of next year. The improved outlook in the U.S. economy gave a boost to the U.S. Dollar index which is now trading at a 5½ year peak at 88.867 .DXY.
As reported at 8:03 a.m. (GMT) in London, the EUR/USD was trading at $1.2331, a level last seen in August 2012; analysts say that the Euro could get a reprieve from the constant pressure if the ECB does not act, though many deem that unlikely given the deflationary threat and the slow growth. The USD/JPY traded higher at 119.44 Yen on the EBS trading platform before edging lower to 119.35 Yen, still a gain of 0.1% in the session.
Slow Growth in Australia Slams Aussie
In Australia, data showed that the economy slowed unexpectedly in the 3rd quarter, prompting discussions of a possible rate cut from the Reserve Bank of Australia. The AUD/USD was trading at $0.8388, a more than 4-year trough. Australia’s GDP fell to 2.7% against expectations that it would remain at least flat at 3.1% in the third quarter.