By: Barbara Zigah
The common currency Euro backed off of recent losses, gaining on the U.S. Dollar in Asian trading as Eurozone officials report that Dublin appears ready to work out a plan to rescue their ailing economy. As reported at 2:15 p.m. (JST) in Tokyo, the Euro gained .4% to trade at $1.3594, up from $1.3589 in New York late trading.
Since early November when it struck a 10-month peak, the Euro has lost nearly 5% of its value against the greenback. Continuing investor uncertainty over Eurozone debt will keep the Euro under pressure, however, even if Ireland moves swiftly to accept a rescue plan from a joint E.U. and IMF mission.
The U.S. Dollar is also back under pressure following the release of disappointing inflation data which showed that core consumer inflation rose .6% over the same period last year. Since 1957 when recordkeeping began, that figure reflects the smallest increase recorded, and reinforces the Federal Reserve’s position that more quantitative easing measures are needed to stimulate the American economy, despite recent calls for the program’s withdrawal.
Following the data release, the U.S. Dollar Index slipped to below 79.00 .DXY, off a 7-week peak of 79.461 .DXY. One economist in Tokyo commented that, even though the Fed’s QE announcement was more than two weeks ago, the market is still in a correction phase as it digests that decision.