Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Forex - Euro rises to 1-1/2 week highs after yuan devaluation

Published 12/08/2015, 12:38 am
Updated 12/08/2015, 01:07 am
© Reuters.  Euro rises to one-and-a-half week highs against dollar

© Reuters. Euro rises to one-and-a-half week highs against dollar

Investing.com - The euro rose to one-and-a-half week highs against the dollar on Tuesday after an unexpected devaluation of the yuan by China’s central bank prompted investors to unwind euro-funded positions on the Chinese currency.

EUR/USD hit highs of 1.1086, the most since July 31 and was last at 1.1063, up 0.41% for the day.

China devalued the yuan in a surprise move overnight in an attempt to help exporters after a recent spate of disappointing economic data.

The central bank described it as a "one-off depreciation" of nearly 2%, based on a new way of managing the exchange rate that better reflected market forces.

The euro rose to one-and-a-half month highs against the yuan, jumping 1.95%.

The single currency was also boosted following reports that Greece and its international lenders have reached a deal on third bailout.

Greece, which narrowly avoided an exit from the euro zone last month, must repay 3.4 billion to the European Central Bank by August 20.

The single currency shrugged off data showing that German economic sentiment unexpectedly deteriorated this month.

The closely watched ZEW index of German economic sentiment fell to 25.0 this month from 29.7 in July. Analysts had expected the index to tick up to 32.0.

It was the lowest level in nine months the report said, as concerns over the current geopolitical and global economic situation weighed.

Meanwhile, the ZEW index of euro zone economic sentiment rose to 47.6 in August from 42.7 in July, ahead of forecasts for an increase to 43.9.

Elsewhere, the euro was also higher against sterling and the yen, with EUR/GBP at 0.7089 and EUR/JPY rising 0.40% to 137.89.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was steady at 97.19, holding below highs of 97.64.

The dollar initially rose following China’s move as investors sold other Asian currencies.

In the U.S., data on Tuesday showed that unit labor costs rose more than expected in the second quarter, while non-farm productivity came in below forecasts.

The Labor Department said unit labor costs rose 0.5% in the three months to June, above forecasts for a gain of 0.1%

Non-farm business sector labor productivity was up 1.3% on a year-over-year basis in the second quarter, missing expectations for a gain of 1.6%.

Productivity is one of the metrics the Federal Reserve is watching as it contemplates hiking short term interest rates.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.