23rd January 2012
News of a potential increase in the International Monetary Fund's (IMF) reserves have served to give the single currency a boost against the US dollar in forex trading today (January 18th).
The euro rose to $1.28 in afternoon trading, as news emerged that the IMF's lending capacity could be increased by as much as $1 trillion to protect the global economy from the impact of the ongoing debt crisis in Europe.
"The positioning is so extreme in the euro ... that it doesn't take much good news to trigger this short-covering," Jane Foley, a currency strategist at Rabobank in London, told the Wall Street Journal.
Yesterday, Reuters reported the euro remained stable despite a downturn in China's output over the last quarter, although the country still registered a small growth in gross domestic product.
The news had little impact on the single currency, although analysts noted the recent gains for the euro may be hard to maintain in the long term.
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