Euro gains on back of production increases
Published 02/02/2010 | 05:00
The euro advanced from the lowest level in almost seven months versus the dollar on increased demand for risk as US stocks advanced and investors bet the global economic recovery is gaining momentum.
The common currency also strengthened versus the yen after a report showed manufacturing in Europe accelerated more than forecast.
The dollar rose versus the yen as the Institute for Supply Management's US factory index increased in January for a sixth straight month.
"For now, investors and markets are optimistic that the global economic recovery is gaining traction," said Omer Esiner, a senior foreign-exchange analyst at Travelex Global Business Payments, a currency exchange network. "That has prompted some profit taking on the euro's steep decline from last week."
The euro increased 0.4pc to $1.3917 in New York, from $1.3863 on January 29. The currency gained 0.9pc to 126.26 yen, from 125.13. The dollar gained 0.5pc to 90.75 yen, compared with 90.27.
The euro fell 2pc against the dollar last week, the biggest weekly loss since April 2009.
The rand and krone rose yesterday on speculation the economic recovery will boost currencies where interest rates are higher. The rand strengthened 1.6pc against the dollar to 7.5038, and the krone gained 0.9pc to 5.8717. South Africa's benchmark rate is 7pc, while Norway's is 1.75pc.
The European Central Bank will keep its main borrowing rate unchanged at 1pc when it meets on February 4, according to all 55 economists in a Bloomberg survey, higher than the Federal Reserve's current range of zero to 0.25pc. (Bloomberg)