The European Single Currency, euro surged to a two-week high on Thursday, October 12, after a slew of strong data that supported a growing view that the European Central Bank will announce a plan to wind down its huge stimulus plan at a policy meeting later this month.
The euro touched its highest in more than two weeks at $1.1878, and was last up 0.1 percent on the day at $1.1867. It has risen for five consecutive sessions.
The euro was also helped by some general dollar weakness, fueled by minutes from the U.S. Federal Reserve’s latest meeting that suggested some central bankers were still concerned about persistently low inflation.
Industry data from Italy beat forecasts after Germany reported robust trade data earlier this week, indicating a broad-based economic recovery in the euro zone despite the single’s currency double-digit gains this year.
Political concerns have also ebbed for now after Catalonia stopped short of formally declaring independence from Spain, putting a floor under the euro.
Morgan Stanley strategists say the euro is set to move higher on increasing signs of robust economic activity and as global large money managers remain underweight the single currency in an environment of strong global liquidity.
The dollar index, which measures the greenback’s value against a basket of six major currencies, touched 92.827, its lowest level since Sept. 26. It was last down 0.2 percent at 92.882.
The Fed minutes on Wednesday showed many policymakers still felt that another rate increase this year “was likely to be warranted” but several noted that additional tightening was dependent on upcoming inflation data.
“The FOMC minutes indicated that the board was still profoundly divided about the slow pick up in prices,” Stephen Innes, head of trading in Asia-Pacific at Oanda, said in a note, Reuters reports.
