Related News:
Euro Advances to Two-Month High on Bets Europe Recovering Faster Than U.S.
The euro advanced to its highest level versus the dollar since the region’s $1 trillion bailout was announced May 10 on evidence the European economy is recovering at a faster pace than the U.S.
The 16-nation currency appreciated as a report showed European confidence in the economic outlook rose to the highest level in more than two years this month and German unemployment decreased. Economists say a report due tomorrow will show slowing U.S. economic growth.
“What’s helping the euro is continued strong data,” said John Doyle, a strategist in Washington at the currency-trading firm Tempus Consulting Inc. “That German unemployment number as well as the economic confidence, it’s enough to push it higher.”
The euro climbed 0.7 percent to $1.3087 at 9:24 a.m. in New York, from $1.2995 yesterday, after reaching $1.3093, the highest level in more than two months. The euro traded at 113.98 yen, compared with 113.66. The yen strengthened 0.4 percent to 87.10 against the dollar, from 87.47.
The shared currency is headed for a 6.8 percent monthly rally against the dollar and a 5.3 percent gain versus the yen, according to Bloomberg data.
An index of executive and consumer sentiment in the euro nations increased to 101.3 this month from 99 in June, the European Commission said today. That’s the highest level since March 2008. The number of people out of work in Germany fell in July for a 13th month, dropping by a seasonally adjusted 20,000 to 3.21 million, the lowest level since November 2008, the Federal Labor Agency said.
Stress Tests
The single currency has also been supported this week as stress tests released July 23 found only seven European banks needed to raise capital.
The U.S. economy grew at a 2.5 percent annualized rate in the second quarter after expanding at a 2.7 percent pace in the first three months of the year, according to the median forecast of 81 economists in a Bloomberg News survey. The report from the Commerce Department is due tomorrow at 8:30 a.m. New York time.
“The U.S. economy appears to be losing momentum, and that’s supporting the euro,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London.
Initial jobless claims in the U.S. dropped by 11,000 in the week ended July 24 from a revised 468,000, Labor Department figures showed today in Washington. The number of people receiving unemployment insurance rose, while those getting extended payments declined.
Weaker Kiwi
New Zealand’s dollar fell for a second day versus the yen after the central bank said deteriorating growth will slow the pace of future interest-rate increases.
Reserve Bank of New Zealand Governor Alan Bollard raised the official cash rate for a second month, increasing it by a quarter-percentage point to 3 percent.
New Zealand’s dollar slid 0.4 percent to 63.32 yen, from 63.60. It was little changed at 72.72 U.S. cents.
The South Korean won slipped 0.2 percent to 1,186.50 per dollar as the Bank of Korea said an index measuring manufacturers’ expectations fell to 102 for August from 104.
The currency rose to a five-week high of 1,181.33 on July 27 before retreating yesterday as traders said the central bank bought dollars to counter the won’s appreciation.
“Concern the recovery is slowing is bringing risk aversion back,” said Seo Jeong Hun, chief economist at Korea Exchange Bank in Seoul. “The possibility of intervention also exists, but exporters may try to repatriate income, so won declines should be limited.”
To contact the reporters on this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net; Keith Jenkins in London at kjenkins3@bloomberg.net
Rate These Stories
Rate this Page