Reuters: US Dollar Report: FOREX-Euro down vs dollar as European stress persists

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FOREX-Euro down vs dollar as European stress persists Apr 30th 2012, 13:41 Mon Apr 30, 2012 9:41am EDT * Euro falls vs dollar, hits 2-week low vs yen * Investors wary of event risk this week * Disappointing U.S. growth keeps dollar under pressure * Dollar hits 2-mth low vs currency basket, yen By Gertrude Chavez-Dreyfuss NEW YORK, April 30 (Reuters) - The euro weakened against the dollar on Monday, on track for its worst monthly performance since December last year, pressured by nagging euro zone stresses as German retail sales came in softer than expected and Spain slipped into recession. Investors were also wary of buying euros before weekend elections in France and Greece and a European Central Bank meeting later in the week that could knock sentiment in the single currency. "There is clear risk aversion in the market," said Boris Schlossberg, director of FX research at GFT in Jersey City, New Jersey, citing Spain's slide into recession and the weaker-than-expected German data. "In short the news from Europe continues to point to further structural stress in the system." The euro failed to gain traction versus the dollar despite signs the U.S. economic recovery is losing momentum and concerns about possible further U.S. monetary easing. This earlier knocked the dollar to a two-month low against a currency basket. Earlier, data showed that U.S. household spending rose 0.3 percent, below consensus forecast for a 0.4 percent increase. Taking into account inflaton, spending rose 0.1 percent. . In early New York trading, the euro fell 0.2 percent against the dollar to $1.3224, as investors were wary of pushing it back towards a near one-month high of $1.3270 hit on Friday. However, it stayed just above support at its 55-day moving average at about $1.3211. On the month, the euro was down 0.9 percent, its worst monthly showing since December last year. "The euro is a bit lower but it's within its recent ranges, with people waiting for elections and U.S. non-farm payrolls data on Friday," said Adam Cole, currency strategist at RBC. The second round of the French presidential vote and elections for a new Greek parliament are due this weekend. Data showing Spain has slipped into recession also highlighted concerns that harsh austerity measures in indebted peripheral euro zone countries are hampering economic activity. This left the euro struggling to benefit from weakness in the dollar, which earlier touched 78.638 against a basket of currencies, its lowest since March 1, before recovering to trade at 78.868, up 0.2 percent on the day. The euro also fell to a two-week low against the yen at 105.887. Investors expect the Japanese currency to benefit from safe-haven demand in view of Europe's debt problems. Markets in most of Europe will be shut on Tuesday for May Day, while Japan celebrates Golden Week holidays, keeping trading on foreign exchange markets a bit subdued. The dollar also hit a two-month low against the yen at 80.010 and was last at 80.100, down 0.2 percent on the day. On the month, the dollar fell 3.3 percent, its weakest monthly performance since July 2011. Market players said the dollar may fall further against the yen given a drop in U.S. Treasury yields. The dollar/yen exchange rate has a tight relationship with the spreads between yields on U.S. Treasuries and Japanese government bonds. Link this Share this Digg this Email Reprints

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