In the currency market, the dollar slid against the euro. Late Thursday, the euro was trading at $1.2668 vs. $1.255 on Wednesday.

“Traders have poured back into the euro today on news that Germany will spend more of its Treasury to support a union to which it is anchored,” wrote Jack Crooks, of Black Swan Capital.

Germany’s Cabinet on Wednesday approved legislation that would allow the forced nationalization of banks as a last resort. And Chancellor Angela Merkel said yesterday that Germany is willing to shore up the International Monetary Fund if needed.

Merkel added that the euro zone “is strong and has proven its worth in the crisis.”

“There’s a sense perhaps that Europe is going to take an activist role, or acknowledge that more needs to be done,” said Daragh Maher, currency strategist at Calyon.

Among the hard data, the Labor Department reported that producer prices rose in January for the first time since last July. Producer prices for finished goods climbed by 0.8%, while core PPI (minus food and energy) rose by 0.4%. Those were much higher than economists’ projections for 0.4% and 0.1% gains.

Source: Dollar Declines Against Euro

Last 5 posts by Doug Casey

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