The Euro rose briefly against the Dollar on Tuesday, after China lowered the Dollar/Yuan reference rate. However the Euro’s rally was short lived as the Yuan fell on apparent Dollar-buying from Chinese banks.The euro dipped 0.1 percent to $1.2298, down from the day’s high of $1.2355. Investors now see the Chinese Central Bank’s recent shift in monetary policy as a short term trading factor that could affect the EUR/USD performance.
Fueling Euro selling was Fitch decision to cut PNB Paribas rating from AA to AA-. The leading French bank’s rating downgrade has re-ignited concerns about the overall state of the European economy.
Up ahead, Forex Investors are advised to keep an eye on this morning’s German Ifo Business Confidence.
Today, Britain’s Treasury chief George Osborne is set to deliver one of the most important as well as most severe budget releases in the last 30 years. Faced with one of the highest budget deficits in the world in terms of percentage of GDP, Britain’s newly elected government has warned of drastic spending cuts and tax increases that analysts predict to be the equivalent to 8% of GDP over the next five years. Threatened with losing its AAA credit rating, Britain needs to effectively tackle its mounting deficit in order to maintain market confidence in its public finances.
Written by Finexo.com