Reuters: US Dollar Report: FOREX-Euro & Aussie in favour, risk appetite whetted

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FOREX-Euro & Aussie in favour, risk appetite whetted Aug 5th 2012, 23:25 Sun Aug 5, 2012 7:25pm EDT * Euro hits 3-week highs vs yen, Aussie at 14-wk highs * U.S. jobs data, ECB hopes lift sentiment * China data due later in the week a key event risk By Ian Chua SYDNEY, Aug 6 (Reuters) - The euro and Australian dollar hit multi-week highs against the yen on Monday, getting the new week off to a buoyant start after stronger-than-expected U.S. jobs data last week lifted risk sentiment. Initial disappointment over the European Central Bank's failure to act immediately last Thursday has also faded, with investors now looking to next month for the bank to help lower painfully high borrowing costs for Spain and Italy. "Investors appear to be coming around to a more rational and positive understanding of what the ECB is moving towards doing," said Shane Oliver, head of investment strategy at AMP Capital Investors. The euro rose to 97.49 yen, from around 97.29 late in New York on Friday, reaching its best level since mid-July. Against the dollar, it fetched $1.2400, within striking distance of last week's one-month peak around $1.2406. Immediate resistance for the single currency is seen at $1.2476, a level representing the 61.8 percent retracement of its June 18-July 24 decline. "We believe the euro can still trade stronger as short positions are squeezed, but continue to believe a lower euro will be part of the policy mix and, hence, would look for higher levels to fade the move," analysts at Barclays Capital wrote in a note. The Australian dollar touched 83.16 yen, highs not seen since early May. On the greenback, it bought $1.0578 , not far off a 19-week peak of $1.0581 set last week. The Aussie is brushing against the top-side of its uptrend channel drawn from June. Data last Friday showed U.S. employers hired the most workers in five months in July, but an increase in the jobless rate to 8.3 percent kept alive hopes of further stimulus from the Federal Reserve. Fed Chairman Ben Bernanke speaks via prerecorded video about economic measurement at 0900 EDT/1300 GMT. With market's newfound optimism still riding high, both the greenback and yen stayed under pressure. The U.S. dollar, though, managed to outperform the yen, rising to 78.56 from lows near 78.00 on Friday. There is little in terms of market-moving data in Asia on Monday, but investors will be keeping a close eye on a raft of Chinese data due later in the week including inflation, industrial production and retail sales on Thursday. For risk sentiment to persist, investors need to get a sense that Bejing is able to successfully engineer a soft landing for the world's second-biggest economy. Echoing earlier government commitments, China's central bank pledged on Sunday to intensify its monetary policy fine-tuning in the second half of this year and improve credit policy to bolster the real economy. On Tuesday, Australia's central bank will hold its policy meeting. All 20 economists polled by Reuters expect the RBA to keep the cash rate unchanged at 3.5 percent. Link this Share this Digg this Email Reprints

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