The Euro rallies as European banks are less reliant on ECB funds

Eurozone data yesterday confirmed that European banks are less reliant on the European Central Banks' funds which has been the key supporting factor for the Euro's rally this week.

Against the US Dollar, the Euro has surged to €/$ 1.37 to set a 6-month high as investors diversify from holding US Dollar reserves and expectations that Europe’s bad news and sovereign debt issues are already priced into markets.

The Euro also held the upper hand against Sterling gaining over a cent from £/€ 1.1650 to £/€ 1.1510. There were also rumours of Europe removing policy stimulus ahead of the United States and Britain helping the Euro although, surely this can only be a rumour.

There was good data in the US yesterday but the reassurance from the Euro banks and the positive data saw risk apettite amongst investors return, contributing to the US Dollar's slide against the Euro.

The Chicago PMI rose in September to 60.4 from 56.7 in August; US initial jobless claims fell to 453,000 in the week ending the 25th September, down from a revised 469,000 the week before; US Q2 GDP growth was revised up to an annualized pace of 1.7% from 1.6% reported previously, on the back of an upward revision to personal consumption growth.

A busy economic calendar is dominated by the Eurozone and UK September manufacturing PMIs and the US manufacturing ISM. Figures relating to the US consumer provide the other focus, with the University of Michigan September confidence and August personal income and spending in the line up.