Euro to Dollar Rate Remains Unchanged
The Euro to Dollar exchange rate was little changed in Tuesday's trading. Forex Millennium Review A decline in European shares caused the euro to dollar rate to erase earlier gains made by the euro due to larger than expected gains in German investor sentiment. Investors remained concerned about the health of US banks.
Financial Institutions Struggling
Banking giant Mellon reported a decline in profits of over 50% and State Street Corp reported an 8-12% decline in operating revenue. The earnings reports caused a decline in stock markets and reinforced the view that financial institutions are struggling and recovery will take more time. Economists say that mixed reports from financial institutions are keeping risk aversion high and are affecting it.
Investors Dump Euro in Favor of Dollar and Yen
These mixed reports have caused many forex investors to dump the euro in favor of safe haven currencies which include the US dollar and the Japanese Yen. The Euro to dollar exchange rate remained unchanged at $1.2920, down from a high of $1.2988. The euro to dollar rate had risen in advance of the ZEW report which measures German investor confidence.
Euro to Dollar Rate to Remain Under Pressure
This is expected to remain under pressure due to uncertainty whether the European Central Bank will adopt unconventional policies to address the ongoing global recession. The ECB is seen by many economists as behind the curve in adopting policies to address the recession and credit crunch and this has had an adverse effect on the euro to dollar rate in currency markets.
