Reuters: US Dollar Report: FOREX-Euro hit by recession worries; Aussie drops

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FOREX-Euro hit by recession worries; Aussie drops Mar 22nd 2012, 14:15 Thu Mar 22, 2012 10:15am EDT * Unexpectedly weak euro zone PMI data hits euro * U.S. jobless claims data suggests improving recovery * Weak China data pushes Aussie to 2-mth low vs USD * Yen up after Japan reports a trade surplus By Julie Haviv NEW YORK, March 22 (Reuters) - The euro fell on Thursday after weak euro zone data revived concerns about a recession in the region and the Australian dollar slumped on data showing a contraction in Chinese manufacturing. The reports contrasted with U.S. data showing unemployment benefits dropped to a fresh four-year low in the latest week. Purchasing managers index surveys revealed unexpected declines in euro zone manufacturing and services activity in March, hit by asharp fall in French and German factory activity. Earlier, PMI data showed factory activity in China shrank in March for a fifth straight month, underscoring worries about risks to global growth. "It's important to note that the trajectory of U.S. data continues to point to an improving recovery and in that respect this jobless claims report contrasts the figures released overnight out of China and the euro zone," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington. Against the dollar, the euro last traded at $1.3158, down 0.4 percent and after hitting an overnight low of $1.3133. Against the yen, the euro was last down 0.9 percent at 109.16. It had dropped to a one-week low of 108.79 after the PMI surveys, a far cry from the euro's near five-month high of 111.43 yen truck on Wednesday. "When you get numbers like this out of the euro zone it definitely puts the growth outlook into question and points to a mild recession," said Niels Christensen, currency strategist at Nordea in Copenhagen. "There should be a widening of rate differentials in favourof the dollar, so a lower euro/dollar will be the result." However, the euro would need to break below $1.30 to take it out of the $1.30-$1.35 trading range it has been in for the last couple of months. A bigger sell-off in equities may be needed to prompt this, Christensen said. Analysts said the poor PMI surveys highlighted the risk of arecession in the euro zone and peripheral debt showed freshsigns of struggling. The Chinese PMI data weighed on growth-linked currencies, especially the Australian dollar given the country's close trading links with China. The Aussie slid nearly 1 percent versus the U.S. dollar to hit a two-month low of $1.0351. That is below the 200-day simple moving average of $1.0399 and the 200-day exponential moving average at $1.0375. YEN GAINS The yen was helped after data from Japan showed the country unexpectedly logged a trade surplus of 32.9 billion yen in February, against a forecast 120 billion yen deficit. The dollar was last down 0.5 percent against the Japanese currency at 82.94 yen, pulling away from a recent 11-month high of 84.187. Japanese importer bids are said to beat 82.50-70 yen while exporter offers are cited at 83.50. Technicals also show there is little support for dollar/yen at his juncture, with the 14-day simple moving average at 82.61, the 50-day at 79.40, the 100-day at 78.45 and the 200-day at 78.10. The 14-day exponential moving average were at 82.62, the 50-day at 80.29, the 100-day at 79.17 and the 200-day at 79.11. The yen has fallen nearly 8 percent versus the dollar in 2012, on the Bank of Japan's easing steps and after the country last year posted its first annual trade deficit in 31 years due to a surge in fuel imports after the Fukushima nuclear accident in 2012. Link this Share this Digg this Email Reprints

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