Euro steadies against dollar

The euro steadied against the dollar in trading after it had reached a near three-month high in Asian deals on increased risk-taking by traders.

|||

London - The euro steadied against the dollar in trading on Wednesday after it had reached a near three-month high in Asian deals on increased risk-taking by traders.

Traders were gearing up for Thursday's monetary policy update from the European Central Bank.

In late morning London deals, the shared eurozone unit dipped to $1.3824 from $1.3831 in New York late on Tuesday. It had reached $1.3862 in Asian trade - the highest level since November 9.

Against the Japanese currency, the dollar gained to 81.40 yen from 81.33 yen on Tuesday.

The euro had rallied in Asian trading hours earlier as surprisingly strong US manufacturing data encouraged risk-taking, dealers said.

Rapidly growing speculation that the European Central Bank may adopt a hawkish stance against rising inflation pressures at Thursday's board meeting also pushed up the single currency, they added.

In contrast, the Federal Reserve remains concerned about the slow pace of recovery in the United States.

“The dollar is being sold as investors are seeking risky assets,” said Hideaki Inoue, an analyst at Mitsubishi UFJ Trust and Banking Corp.

“The Fed is saying it will keep the monetary easing policy and the markets are seeing the impact from the political unrest in Egypt will be limited.”

He said a series of US economic reports, in particular data released by the Institute for Supply Management, were strong and indicated manufacturing in the United States was accelerating.

The Institute for Supply Management said Tuesday its purchasing managers index rose to its highest level since 2004. The jump was much stronger than anticipated and marked an 18th straight month of expansion.

The European Central Bank is meanwhile likely to ramp up anti-inflation rhetoric when its governing council meets on Thursday, but refrain from any concrete steps owing to mixed signals on where the eurozone economy is headed.

The main ECB interest rate will probably emerge from the meeting unchanged at 1.0 percent, a level it fell to in May 2009, economists said.

Major central banks have maintained ultra-low lending rates to keep credit flowing to the wider economy but now face sharp climbs in inflation that could force a rethink in the coming months.

Eurozone inflation shot up to 2.4 percent in January, the European Union warned on Monday, an event anticipated by ECB policymakers who nonetheless feel price rises will moderate towards the end of 2011. Their inflation target is just below 2.0 percent.

In London on Wednesday, the euro changed hands at $1.3824

against $1.3831 in New York late Tuesday, at 112.53 yen (112.47), £0.8527 (0.8562) and 1.2921 Swiss francs (1.2937).

The dollar stood at 81.40 yen (81.33) and 0.9347 Swiss francs (0.9352).

The pound was at $1.6209 (1.6146).

On the London Bullion Market, the price of gold rose to $1,337.07 an ounce from $1,331.50 late on Tuesday. - Sapa-AFP

Source: http://www.iol.co.za/euro-steadies-against-dollar-1.1020387

North and Central America Clint Eastwood TV ratings Financial Services Authority (FSA) India Nicolas Anelka