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Euro gets boost from eurozone growth data
[NEW YORK] A rise in German business confidence and signs of a pickup in lending in Europe gave a boost to the euro on Monday.
The single currency jumped more than one percent against the dollar, hitting US$1.1132, the highest level in two weeks, before easing to US$1.1091 in late trade.
Behind the gain was a jump in the growth of the M1 measure of eurozone money supply, to 11.8 per cent in June, signaling strengthened overall growth.
Ian Shepherdson of Pantheon Macroeconomics said the gain in M1 - very liquid deposits - points to a pickup in incomes in households and the private sector.
"In a bank-based economy, overnight demand deposits is the most direct measure of liquidity available to the private economy, and this indicator continues to tell a convincing cyclical recovery story," Mr Shepherdson said.
"Combined with low inflation, real M1 - the best leading indicator in the eurozone - indicates a surge in GDP growth on par with previous record business cycle upturns."
Added to that was a gain in the Ifo index of German business confidence, which rose to 108 points, the first increase in three months, from 107.5 in June.
Economist Andreas Rees of UniCredit said that "illustrates that German companies have gradually been leaving the Greek crisis behind them." "The fundamental upward trend in the German economy which started in autumn of last year is intact," he said.