Reuters: US Dollar Report: FOREX-Euro firms on equity gains, market awaits Wall St

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FOREX-Euro firms on equity gains, market awaits Wall St Oct 31st 2012, 12:33 Wed Oct 31, 2012 8:33am EDT * Euro gains versus dollar helped by firmer equities * Investors look for dollar direction on U.S. market open * Norwegian crown, Swiss franc boosted vs euro By Philip Baillie LONDON, Oct 31 (Reuters) - The euro rose on Wednesday as firmer European equities helped lift risk appetite, pushing the single currency higher, while dollar direction will take its cue when U.S. markets reopen. Traders said demand from Middle Eastern and Asian sovereign investors and a supranational also buoyed the euro, which was up 0.4 percent at $1.3009. "Today it is sentiment driving the euro up and stock markets are slightly positive, which has pushed it higher," said Antje Praefcke, currency strategist at Commerzbank in Frankfurt. She added that trade was quiet before a holiday in many European countries on Thursday. Traders also said the euro's gains against the dollar may be limited due to expected month-end demand to buy dollars. Investors are now looking to the open in U.S. markets following two days of closure as storm Sandy hit the U.S. East Cost for indications of the dollar's direction. Higher equities typically benefit the euro and other perceived riskier currencies like the Australian dollar and dent the safe-haven dollar and yen. Insurance payouts in the wake of the storm could weigh on the dollar, although a rise in domestic demand for repair work could boost it. "The market is waiting to see how the U.S. market opens after Sandy. Equity futures are higher so people are expecting a positive opening," said Arne Lohmann Rasmussen, head of currency research at Danske Bank in Copenhagen. "Over the next few months we think euro/dollar will break higher. We believe the market is underestimating the effect of the Fed's open-ended easing policy and tail risks will be priced out of the euro once Spain applies for a bailout." Earlier, comments by Minneapolis Federal Reserve Bank President Narayana Kocherlakota, who strongly defended the U.S. central bank's ultra-easy monetary policy, weighed on the dollar. The issue of the U.S. economy's burgeoning fiscal cliff in the run up to the country's Presidential election on November 6 could add to the downside, but analysts said the next focus would be jobs data due on Friday, which could be positive. But gains in the euro have been capped in recent weeks due to uncertainty of when Spain may ask for a bailout and whether labour reforms in Greece will unlock its next aid tranche from the IMF, EU and ECB Troika. This has kept it in a range between $1.2800 and $1.3200 since mid-September. NORWAY'S CROWN GAINS The Norwegian crown rose against the euro after the country's oil fund said it held back from selling crowns in November after buying 500 million in October, stronger retail sales and better-than-expected credit figures. The euro fell to 7.3860 crowns, a one week low against the single currency. Investors will look to a rate decision from the Norwegian Central Bank due at 1300 GMT where it is likely to hold rates. Commerzbank's Praefcke said the central bank could postpone its next rate hike and lower its forecasts for growth but is positive on the Norwegian crown in the near term. The euro was also weak against the Swiss Franc, hitting a three week low of 1.2074 francs, with some market players citing increased repatriation flows from deleveraging by Swiss Bank UBS, which cut 10,000 jobs this week. The dollar was up 0.2 percent at 79.77 yen, recovering from a fall to 79.28 yen on Tuesday, with improved risk appetite weighing on the safe-haven Japanese currency. The euro rose 0.5 percent to 103.67 yen, off Tuesday's two-week low of 102.175 yen. Link this Share this Digg this Email Reprints

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