The euro started the trading week a little changed against the greenback during the early hours of the European session, as the currency advanced to $1.3880 from $1.3330 in the previous session when the disappointing US housing data dragged the US dollar lower. As of 6:52am GMT, the euro was selling at $1.3366 against the US dollar.
The euro rose to $1.3451, its highest level in over six months. The euro was assisted by the statement released by Bundesbank, which showed that the low rates that were set by the European Central Bank on Monday may not be guaranteed.
In the statement released by Bundesbank it stated “The actual key ECB interest rates will continue to depend on the medium-term outlook for inflation, which is based on expectations regarding future developments in the real economy and on credit and monetary aggregates.”
The ongoing speculation over the Federal Reserve tapering its quantitative easing program later this year, has been affecting the market, as investors focus on the next Fed meeting on September 17-18 for more clues.
The minutes from the previous Federal Open Market Committee (FOMC) gathering, indicated that the policymakers were at ease with the tapering of the bond-buying program by the end of year.
According to discussions that were held in July, Fed members were looking into presenting more specific details regarding the tapering of its $85 monthly bond-buying program, but decided to withdraw from doing so because of the possibility of stirring uncertainty about the policy’s aim.
Weak US Housing Data
The housing sector were disappointed by the biggest monthly fall in over three years. According to the housing data released, the realtors’ contracts closed in 13.4% on some of the new homes, summing up a total number of sold units to 394, 000, the US department of Commerce reported.
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