The euro rose 0.95% against a broadly weaker US dollar this morning to trade near $1.2805 by late morning.
It seems that developments from China have helped the continental currency make solid gains against most currencies this morning. Spanish Prime Minister Jose Luis Rodriguez Zapatero met with Chinese Prime Minister Wen Jiabao late Tuesday in the hopes that China would continue to purchase Spanish government bonds. According to the People Daily’s newspaper, the Chinese Premier called for joint measures to enhance the world’s confidence in the euro and to support the EU in general. The comments helped investors brush aside lacklustre PMI manufacturing data from the eurozone, which fell to a six-month low in August. Instead, better-than-expected growth in Chinese manufacturing took centre stage this morning, encouraging investors back into riskier assets, which saw equity markets rally and pushed the euro higher. Attention now turns to the US where the ADP employment numbers and the ISM Manufacturing Index will be announced this afternoon. The outcome of these two important indicators is likely to affect risk sentiment in trading this afternoon.
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