Date: Monday 18 Jun 2012
The euro and the pound rallied on Friday ahead of weekend elections in Greece and on increased expectations that central banks across the world will take further action to boost growth.
The single currency climbed to $1.2646 from $1.2612 late Thursday on hopes that Greece will vote for the country's pro-bailout party. The euro jumped on Thursday after reports that central banks are preparing co-ordinated action to boost liquidity following Greece’s elections.
Investors also looked to possible easing measures in the US too after disappointing US data. Manufacturing activity in New York in June far way below expectations, to the lowest level since November while industrial production in May fell 0.1%.
While the reports reflect weakness in the US recovery, it also raises the prospect of the Federal Reserve unleashing further monetary easing. The Federal Open Market Committee is scheduled to meet on Tuesday and Wednesday.
The dollar index, which measures the greenback against a basket of six major currencies, dropped to 81.584 from 81.917 on Thursday and was down 1.1% for the week.
The Japanese yen surged after the Bank of Japan left its interest rates and kept the size of its monetary stimulus unchanged.
The dollar traded at ¥78.70 from ¥79.33 on Thursday while the euro fetched ¥99.50 from ¥99.74 the previous session.
Sterling rallied on Friday as investors reduced bearish positions ahead of the Greek election. There was also some hope that the Bank of England will take action to protect the UK economy from the Eurozone crisis.
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