The euro was stronger against the US dollar ahead of this afternoon's ECB interest rate decision.
The euro was defensive during Asian trading as investors mulled over the prospect that the ECB may announce an extension to its liquidity facility for banks at today's policy meeting. EUR/USD broke out during European trading, however, tracking gains in the equity market. Helping to lift the euro was better-than-expected year-on-year growth in eurozone GDP. Eurostat reported this morning that GDP in the euro area grew by 1.9% in the second quarter compared to a year ago, which was ahead of the 1.7% growth economists were expecting. The same report showed that household consumption increased by 0.5% in the second quarter while corporate investments increased 1.8%. This demonstrates the ability of the eurozone nations to continue with growth following the fallout of the European sovereign debt crisis. The ECB interest rate decision is scheduled for release at 12:45pm (London time) with ECB President Jean-Claude Trichet to hold a press conference at 1:30pm. Interest rates are expected to be kept on hold at 1% so the attention will be on Mr Trichet's press conference and what he reveals about the health of the European recovery.
You might also be interested in: