Reuters: US Dollar Report: FOREX-Euro scales 3-week high vs dollar; Aussie gains

Reuters: US Dollar Report Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

FOREX-Euro scales 3-week high vs dollar; Aussie gains Mar 23rd 2012, 19:40 Fri Mar 23, 2012 3:40pm EDT * Euro posts second weekly gain; Aussie stabilizes * Dollar should remain firm on U.S. outlook * EZ finance ministers to meet next week on bailout deal By Gertrude Chavez-Dreyfuss NEW YORK, March 23 (Reuters) - The euro climbed to a three-week peak against the dollar on Friday, snapping three straight days of losses, while the Australian dollar stabilized after a recent plunge as concerns over a slowdown in China and the euro zone eased slightly. The dollar, however, remained supported by an improving economic landscape in the United States that contrasts starkly with European countries that are teetering on the brink of recession or are already in one. Data on sales of new U.S. homes on Friday backed the view the country's housing sector is on a stable path to recovery, something that is seen as key to the health of the overall economy. "We're seeing a re-pricing of that significantly bearish European story and a re-pricing of that excessively bullish U.S. story," said Stewart Hall, currency strategist a RBC Capital Markets in Toronto. Overall, worries about faltering global growth in the euro zone and China, which hit stocks and riskier currencies on Thursday, eased, tempering demand for safer bets such as the dollar and the yen. The euro last traded at $1.32650, up 0.5 percent, after hitting a three-week high of $1.32940 earlier in the global session. It was also up from Thursday's low of $1.31334 and on track for a second consecutive weekly gain, its best week since late February. A key level of resistance for the euro is $1.33, and a break of that level would likely move it up toward $1.3500. The Australian dollar, meanwhile, was up 0.6 percent at US$1.0456 after hitting a two-month low of US$1.0336 the previous session, while the New Zealand dollar advanced 0.9 percent to US$0.8169 . "Today says: 'Don't worry, be happy'," said Jonathan Lewis, chief investment officer at Samson Capital Advisors, which has assets under management of around $7 billion. "That's what it means when the best performing currencies on the day are commodity and growth-oriented ones like the New Zealand and Australian dollars, and the Norwegian krone and the Japanese yen is near the back of the bus." Against the yen, the greenback was flat at 82.510 yen , while the euro rose 0.4 percent to 109.400 yen . The greenback has gained 7 percent against the yen since the start of this year. The euro has jumped 9.6 percent versus the Japanese currency, with gains accelerating after the Bank of Japan, in a surprise move in February, initiated more quantitative easing. The relationship between risk appetite and the dollar has become more complicated, according to Chris Fernandes, vice president, senior foreign exchange adviser for the capital markets division at Bank of the West in San Ramon, California. "Whereas in the past the dollar would tend to fall as risk appetite was rising, the dollar is now benefiting from pro-risk developments, as U.S. economic data has generally bested expectations recently," he said. The recent dollar rally, however, has been tempered by the possibility the Federal Reserve could launch a third round of quantitative easing, said Fernandes, who helps oversee almost $10 billion in assets under management. If the Fed were to more quantitative easing, it would be negative for the dollar, because it is tantamount to printing money and dilutes the greenback's value. Next week, the market's focus is likely to shift back to Europe, with economic data from Germany, bond auctions in Italy and Spain, and a European finance ministers' meeting. "Any sign of erosion in restored confidence for these bonds is likely to weigh on the euro," said Aroop Chatterjee, currency strategist at Barclays Capital in New York. Euro zone finance ministers are moving closer to agreeing a combined rescue fund of around 700 billion euros ($924 billion) in Copenhagen next week and anything higher would probably be too ambitious, euro zone diplomats said on Friday. A larger euro zone rescue fund would go a long way toward reassuring markets a viable firewall is in place should Portugal, Italy or Spain continue to struggle. "I believe we may be in for a bit of range-trading right now in the major currency pairs, with the EUR/USD moving between $1.3000-1.3500, and the USD/JPY having a bit more upside, looking at 82.00-85.00," said Bank of the West's Fernandes. "I am still favoring a stronger EUR, but we may not see this come to fruition until the second half of this year," he said. Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions