Open AccessEuro Currency Trends In The Global Market
Author(s) -
C. Pat
Publication year - 2011
Publication title -
journal of business and economics research
Language(s) - English
Resource type - Journals
eISSN - 2157-8893
pISSN - 1542-4448
DOI - 10.19030/jber.v1i4.3001
Subject(s) - economics , currency , monetary economics , stock market , liberian dollar , stock (firearms) , granger causality , financial economics , econometrics , finance , mechanical engineering , paleontology , horse , biology , engineering
This study presents preliminary evidence on the long-term relationship between the euro and major international financial and non-financial assets. A secular relationship, if it exists, should provide the impetus for the new European currency to not only sustain itself over the long haul but also become a commanding international currency just like the U.S. dollar. Empirical results show that the pricing of crude oil is inversely related to the value of the euro, priced in U.S. dollars. Unit root tests show that series are stationary after first differencing, and cointegrated. However, Granger causality tests reveal that the euro does not Granger-cause crude oil price. Also, there is no reverse causality from oil to euro. Nonetheless, a two-way causality exists between the euro and the U.S. stock market. Contrary to the findings in earlier studies, there is no evidence of causality from the U.S. stock market to leading European financial market series.