Reuters: US Dollar Report: FOREX-Euro gains vs dlr, yen; Bernanke triggers new QE talk

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FOREX-Euro gains vs dlr, yen; Bernanke triggers new QE talk Mar 26th 2012, 18:20 Mon Mar 26, 2012 2:20pm EDT * Bernanke says more growth needed to improve jobs picture * U.S. pending home sales data disappoint * Worries grow about Spain after election setback NEW YORK, March 26 (Reuters) - The euro advanced against the dollar and yen for a second straight day on Monday as weaker-than-expected U.S. data and Federal Reserve Chairman Ben Bernanke's cautious comments on the job market spurred expectations for more policy easing. The single currency hit a better than three-week high against the greenback and jumped more than 1 percent against the yen. Still, analysts said the euro zone's debt crisis was far from over and the currency could come under pressure this week. Bernanke's warning that the U.S. economy needs to grow faster to get unemployment down led investors to take on more risk on hopes the central bank could conduct another round of quantitative easing. Disappointing home sales data reinforced that outlook later on Monday, with contracts to purchase previously owned U.S. homes unexpectedly falling in February. "All this left the market with the nagging thought that the Fed is not quite done with economic stimulus," said Boris Schlossberg, director of FX Research at GFT in Jersey City, New Jersey. "I think they have not in any way, shape or form eliminated that possibility." News from Europe also helped the single currency, with German Chancellor Angela Merkel giving veiled approval to an expected increase in the region's financial firewall this week, with finance ministers meeting in Copenhagen on March 30-31. The euro advanced 0.5 percent to $1.3331 on Monday and touched its highest since March 1. Against the yen the single currency jumped as high as 110.54 yen before more recently trading at 110.44 yen, up 1.1 percent. The dollar also slid against the Swiss franc, off 0.5 percent to 0.9035 francs. The dollar's session trough against the Swiss franc was the lowest since March 2, according to Reuters data A number of events this week could help clarify how well policymakers are managing problems in the euro zone. They include bond auctions in Italy and Spain's budget on Friday. Italy hopes to raise up to 7.5 billion euros amid renewed pressure on peripheral euro zone debt. Worries are also growing about Spain after a government setback in regional elections, making Prime Minister Mariano Rajoy's task of pushing through harsh spending cuts more difficult. "Really we've made a big stride but we haven't actually solved the problems" in the euro zone, said Camilla Sutton, chief currency strategist at Scotia Capital. The euro could see recurring bouts of selling through the year as those worries persist, she added. DOLLAR FIRMER AGAINST YEN The dollar advanced against the Japanese currency, gaining 0.6 percent to 82.81 yen. Traders said they would prefer to buy the dollar and sell the yen, with repatriation inflows ahead of the Japanese fiscal year-end on March 31 unlikely to change the bearish sentiment toward the Japanese currency over the medium term. "We are expecting the dollar/yen pair to trade in a 80-85 yen range with a risk of an upside break. A lot will depend on whether the economies outside the U.S. also pick up," said Paul Robson, currency strategist at RBS Global Banking. "As long as the U.S. economy shows signs of outperforming the others, the dollar would be supported." The growth-linked Australian dollar was up 0.5 percent at $1.0514, recouping some of last week's 1.2 percent decline. Link this Share this Digg this Email Reprints

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