Wednesday June 24, 2009
LONDON: The euro climbed against the dollar on Tuesday, breaking the 1.40 dollar mark on supportive eurozone economic data as investors looked ahead to this week's US Federal Reserve monetary policy meeting.
In late trade in London, the European single currency rose to 1.4030 dollars from 1.3856 dollars in New York late on Monday.
Against the Japanese currency, the dollar declined to 95.36 yen from 95.86 yen on Monday.
The business contraction in the 16 countries using the euro was the shallowest for nine months in June, despite a steep decline in the service sector, a survey showed on Tuesday.
The eurozone's purchasing managers' index (PMI), compiled by data and research group Markit, rose to 44.4 points in June from 44.0 points in May, according to a first estimate, fuelling hopes that the recession may be bottoming out.
However the latest figures remain firmly below the boom-bust line of 50 points -- a score below 50 indicates a contraction -- for a 13th consecutive month in the recession-hit eurozone economy.
"The eurozone economy is showing signs of stabilisation, but a return to positive growth might have to wait until 2010," said ING economist Carsten Brzeski.
"Further unfolding of government stimulus, combined with the European Central Bank's aggressive monetary easing, should help to stabilise the economy further."
He added that "there is now growing evidence that the worst is behind us" in the eurozone.
Traders were also looking ahead to the US Federal Reserve's two-day monetary policy meeting, starting later Tuesday, amid concerns over the safety of US debt and the bank's future lending rates policy.
"If the Fed suggests that rates will be kept low for a prolonged period whilst signalling optimism on the recent improvements in data, then risk appetite is likely to be restored quickly, hence providing support" to the euro against the dollar, BNP Paribas bank analysts said.
The yen and dollar had benefited from safe haven flows on Monday after the World Bank sapped hopes that the global economy was on the mend.
The World Bank slashed its forecast for developing nations' economies, estimating growth at 1.2 percent this year, while warning more measures were needed for a recovery to take hold.
Meanwhle a leading member of the European Central Bank, Axel Weber of Germany, hinted on Tuesday that its current cycle of sharp interest rate cuts was over, saying its efforts so far made further decreases unnecessary.
Eurozone banks were expected to flock to an unprecedented loan offer at the ECB, which said it would lend an unlimited amount of the single currency to banks for a full year for the first time at a record low rate of 1.0 percent.
In late London trade on Tuesday, the euro was changing hands at 1.4030 dollars against 1.3856 dollars late on Monday, at 133.46 yen (132.84), 0.8593 pounds (0.8475) and 1.5026 Swiss francs (1.5059).
The dollar stood at 95.36 yen (95.86) and 1.0736 Swiss francs (1.0866).
The pound was at 1.6286 dollars (1.6343).
On the London Bullion Market, the price of gold firmed to 920.75 dollars an ounce from 919.25 dollars an ounce late on Monday.
(AFP
LONDON: The euro climbed against the dollar on Tuesday, breaking the 1.40 dollar mark on supportive eurozone economic data as investors looked ahead to this week's US Federal Reserve monetary policy meeting.
In late trade in London, the European single currency rose to 1.4030 dollars from 1.3856 dollars in New York late on Monday.
Against the Japanese currency, the dollar declined to 95.36 yen from 95.86 yen on Monday.
The business contraction in the 16 countries using the euro was the shallowest for nine months in June, despite a steep decline in the service sector, a survey showed on Tuesday.
The eurozone's purchasing managers' index (PMI), compiled by data and research group Markit, rose to 44.4 points in June from 44.0 points in May, according to a first estimate, fuelling hopes that the recession may be bottoming out.
However the latest figures remain firmly below the boom-bust line of 50 points -- a score below 50 indicates a contraction -- for a 13th consecutive month in the recession-hit eurozone economy.
"The eurozone economy is showing signs of stabilisation, but a return to positive growth might have to wait until 2010," said ING economist Carsten Brzeski.
"Further unfolding of government stimulus, combined with the European Central Bank's aggressive monetary easing, should help to stabilise the economy further."
He added that "there is now growing evidence that the worst is behind us" in the eurozone.
Traders were also looking ahead to the US Federal Reserve's two-day monetary policy meeting, starting later Tuesday, amid concerns over the safety of US debt and the bank's future lending rates policy.
"If the Fed suggests that rates will be kept low for a prolonged period whilst signalling optimism on the recent improvements in data, then risk appetite is likely to be restored quickly, hence providing support" to the euro against the dollar, BNP Paribas bank analysts said.
The yen and dollar had benefited from safe haven flows on Monday after the World Bank sapped hopes that the global economy was on the mend.
The World Bank slashed its forecast for developing nations' economies, estimating growth at 1.2 percent this year, while warning more measures were needed for a recovery to take hold.
Meanwhle a leading member of the European Central Bank, Axel Weber of Germany, hinted on Tuesday that its current cycle of sharp interest rate cuts was over, saying its efforts so far made further decreases unnecessary.
Eurozone banks were expected to flock to an unprecedented loan offer at the ECB, which said it would lend an unlimited amount of the single currency to banks for a full year for the first time at a record low rate of 1.0 percent.
In late London trade on Tuesday, the euro was changing hands at 1.4030 dollars against 1.3856 dollars late on Monday, at 133.46 yen (132.84), 0.8593 pounds (0.8475) and 1.5026 Swiss francs (1.5059).
The dollar stood at 95.36 yen (95.86) and 1.0736 Swiss francs (1.0866).
The pound was at 1.6286 dollars (1.6343).
On the London Bullion Market, the price of gold firmed to 920.75 dollars an ounce from 919.25 dollars an ounce late on Monday.
(AFP
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