Reuters: US Dollar Report: FOREX-Euro on track for worst month vs dlr since December

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FOREX-Euro on track for worst month vs dlr since December Apr 30th 2012, 18:29 Mon Apr 30, 2012 2:29pm EDT * Euro falls vs dollar, hits 2-week low vs yen * Euro/dollar implied vol nears 4-year low * Disappointing U.S. growth keeps dollar under pressure * Dollar hits more than 2-month low vs yen By Julie Haviv NEW YORK, April 30 (Reuters) - The euro dropped against the dollar o n M onday and was on track for its worst month since December, weighed down by news of Spain slipping back into recession and signs of weaker economic momentum in the United States. Investors were also wary of buying euros before weekend elections in France and Greece and a European Central Bank meeting this week that could further knock sentiment on the euro zone currency. "All the news out of Europe is getting worse, although we're still in a range," said Win Thin, senior currency strategist at Brown Brothers Harriman in New York. "I think the European news and the generally weak U.S. data are sort of feeding into this risk-aversion mode." The euro failed to gain traction despite signs the U.S. economic recovery was losing momentum, raising the possibility of further U.S. central bank monetary easing. Data on U.S. spending and business activity in the Midwest reinforced that view. In afternoon New York trading, the euro fell 0.2 percent to $1.3228 against the dollar, with investors wary of pushing it back toward a near 1-month high of $1.3270 reached on Fri day. However, it stayed just above support at its 55-day moving average at about $1.3205. On the month, the euro was down 0.9 percent, its worst performance since December last year. The euro, however, has not closed below $1.30 or above $1.35 since Jan. 20. Implied euro/dollar volatility, a gauge of options market price expectations in either direction, reflect the currency pair's narrow trading range, reaching 9.4 percent on Monday, its lowest since August 2008. "Volatilities across a lot of (currency) pairs are at 4-year lows," said John Hopkinson, head of FX quantitative and options research at BofA Merrill Lynch. "It is just a reflection of the fact that the dollar has been rangebound for a few months now, in large part in my view because the central banks are keeping a lid on any tail risks." Markets are on tenterhooks, awaiting the second round of the French presidential vote and elections for a new Greek parliament this weekend. Meanwhile, data showing Spain slipped into recession highlighted concerns that harsh austerity measures are hindering growth. The yen was one of the big gainers of the day as investors sought the Japanese currency's safety on global economic fears. The euro dropped to a two-week low against the yen at 105.43 and last traded at 105.62, down 0.7 percent. Investors expected the Japanese currency to benefit from safe-haven demand in view of Europe's debt problems. The dollar also hit a more than two-month low against the yen at 79.710 yen. For the month, the dollar was down 3.4 percent, its weakest monthly performance since July 2011. Greg Michalowski, chief currency analyst at online FX broker FXDD, said the next key target for dollar/yen to the downside comes at the 100-day moving average at 79.54 level. He added that the currency pair has not closed below this level since Feb. 8. Link this Share this Digg this Email Reprints

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