Euro is higher today, gaining as risk appetite returns to the market and prompts a preference for high beta currencies. Even though the eurozone economy seems to be shrinking, all of the focus is on the relief over a fiscal cliff deal in the United States.
The latest manufacturing data out of the eurozone indicates that contraction is still an issue. Markit points out that the manufacturing purchasing managers index moved down to 46.1 in December from the 46.2 level in November. As the contraction continues, there are worries about the eurozone’s economy.
However, the euro is getting help from the fact that there is a great deal of relief over the fiscal cliff agreement in the United States. With a deal passed, risk appetite is running high, and currencies like the euro are getting a boost. Also helping the euro right now is a belief that some of the recently struggling economies, like Italy and Ireland, are beyond the worst point and that they are ready to improve.
For now hope is enough to give the euro a boost against its major counterparts.
At 15:08 GMT EUR/USD is up to 1.3254 from the open at 1.3205. EUR/GBP is holding steady at its opening level of 0.8127. EUR/JPY is up to 115.5390 from the open at 114.4750.
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