Euro strengthens again

Story link: Euro strengthens again

The euro strengthened versus the US dollar and the pound again on Thursday as crude oil prices continued to rise on worries about where Tropical Storm Gustav will go as it strengthened again to near-hurricane force.

Gains for the euro was also helped by speculation that the rising oil prices will fuel inflation and force the European Central Bank of raise interest rates next year.

Inflation is already at an annual rate of 4 percent in the Eurozone, double the ECB’s 2 percent target.

In morning trade in New York, it took $1.4723 to buy a euro, while the euro was worth 80.49p and ¥161.1063.

Meanwhile, the Australian and New Zealand dollars both strengthened versus the dollar and the yen, with gains for the Aussie coming on a new report showing that business investment rose much more than had been anticipated in the second quarter, with capital spending up 5.7 percent in the second quarter from first-quarter levels.

Investors still expect the Reserve Bank of Australia to cut interest rates next year, but not by as much as previously estimated.

The Aussie was worth 86.44 cents US and ¥94.5924 in mid-morning trade in New York, while at the same time it took 70.22 cents US or ¥76.84 to buy a New Zealand dollar.

The rand strengthened versus the greenback and the euro as prices for gold and platinum saw gains; South Africa produces the vast majority of the world’s platinum.

At mid-morning in New York, the rand traded at $7.7085 to the dollar and at R11.352 to the euro.

Advances for the rand came even though producer price inflation in South Africa was at 18.9 percent in July, from 16.8 in June, according to government data, while consumer inflation was up to 13 percent in July, from 11.6 percent in June.