Reuters: US Dollar Report: FOREX-Euro rebounds from 3-week lows, gains seen capped by Spain

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 rebounds from 3-week lows, gains seen capped by Spain Oct 1st 2012, 13:21 Mon Oct 1, 2012 9:21am EDT * Likely Moody's downgrade could push Madrid to seek bailout * Euro zone PMI not as bad as earlier estimates By Gertrude Chavez-Dreyfuss NEW YORK, Oct 1 (Reuters) - The euro rallied from three-week lows against the dollar on Monday as euro zone manufacturing data came in less grim than expected, although gains were limited by concerns about a possible credit rating downgrade for Spain. Data showed France's manufacturing sector deteriorated sharply in September, while the Purchasing Managers' Index (PMI) for Europe's largest economy, Germany, rose to 47.4 in September. The German reading was the highest since March, but still below the 50 line that separates growth from contraction. The PMIs for Italy and Spain were not bad as expected, providing some relief for the euro, which has been beset by worries about sovereign debt and the banking sector. "The German data continued to show a shrinking manufacturing sector...but the rebound heartened investors who speculated that manufacturing in Europe's largest economy may have bottomed out in the summer," said Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York. The euro rose 0.5 percent to $1.2925, although some analysts said its resilience was due less to confidence in the euro zone than to dollar weakness after the U.S. Federal Reserve unleashed another round of monetary easing last month. "People are finding excuses to buy the euro because they do not particularly want to be long dollars and risk being bitten by the Fed," said Jane Foley, senior currency strategist at Rabobank. The euro hit a three-week low of $1.2802 in Asian trade, breaking below support at its 200-day moving average at $1.2823. A daily close below $1.2823 could signal further weakness ahead. Camilla Sutton, chief currency strategist at Scotia Capital in Toronto, said she expects the euro to trade in a range of between $1.28 to $1.32 against the U.S. dollar until there is a catalyst sufficiently large to push it out. She added that Scotia's year-end target was $1.26 for the currency pair. Investors were awaiting the outcome of credit agency Moody's review of Spain's sovereign rating. Europe's fourth largest economy may be downgraded to junk status, piling pressure on it to seek an international bailout soon. "A downgrade could force Spain's hand in seeking a bailout and should see a relief rally in the euro," said Adam Myers, senior foreign exchange strategist at Credit Agricole. "But until that happens, weak economic data will add to the downward pressure on the euro." DOLLAR WEAKNESS Speculators boosted bets against the dollar in the latest week to the highest in more than a year, according to data from the Commodity Futures Trading Commission released on Friday. The dollar edged up 0.1 percent against the yen to 77.96 yen, off a more than two-week low of 77.43 yen hit on Friday. The euro rose 0.5 percent against the Japanese currency to 100.45 yen. The Bank of Japan's quarterly tankan survey of business sentiment released on Monday showed big Japanese manufacturers expect the dollar to average around 79.06 yen in the fiscal year through March 2013. The survey also showed the mood among major manufacturers worsened in the latest quarter and was likely to stay gloomy, dragged down by weak Chinese and European demand. Data on Monday showed China's factory purchasing managers' index rose to 49.8 in September from August's 49.2. The figure was in line with expectations but pointed to a continued contraction in activity. 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