Reuters: US Dollar Report: FOREX-Euro extends gains; Australia, New Zealand dollars shine

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FOREX-Euro extends gains; Australia, New Zealand dollars shine May 9th 2013, 08:26 Thu May 9, 2013 4:26am EDT * Sovereign buying pushes euro to session highs * Aussie, Kiwi dollars recover from lows * U.S. jobless claims to provide cue for dollar By Anirban Nag LONDON, May 9 (Reuters) - The euro rose for a third straight day against the dollar on Thursday as some sovereign investors, encouraged by signs of an economic recovery in Germany, bought the single currency. But gains are likely to be limited on expectations the European Central Bank could ease monetary policy further to support the broader euro zone economy, which is struggling. The single currency lost substantial ground against the Australian and New Zealand dollars , which were buoyed by better-than-expected jobs numbers. Both currencies rebounded from lows struck after their central banks moved this week to tame their strength. The euro rose 0.1 percent to $1.3170, extending gains made after robust industrial data from Germany this week. Offers to sell the euro at $1.3200 were cited by traders with resistance expected around the May 1 peak of $1.3243. The euro was flat against the yen at 130.17 yen, not far from a three-week high of 130.43 hit on Wednesday. "Investors have been focusing on the good German data and ignoring the soft patch elsewhere," said Peter Kinsella, currency strategist at Commerzbank. "The market being structurally short of euros, we think there could be some more gains before it eventually grinds lower." ECB policymakers Yves Mersch and Joerg Asmussen said on Wednesday the central bank still had room to for manoeuvre should the euro zone economy continue to weaken. The ECB cut its main rate to 0.5 percent last Thursday. "The impact of the ECB rate cut was limited. The euro might attempt a move lower but on the other hand there are fewer people betting on a long-term downwards move," said Jun Kitazawa, senior vice president of FX at Brown Brothers Harriman. Part of the reason the euro is not falling sharply, especially against the dollar, is because the U.S. economy appears to be losing steam. That has underpinned expectations the Federal Reserve will continue to keep policy ultra-loose. U.S. weekly jobless claims due on Thursday will provide cues about the labour market there. The dollar also pulled back against the yen, dropping 0.2 percent to 98.80 yen. AUSSIE AND KIWI RECOVER The Australian and New Zealand dollars bounced after both countries posted strong jobs data. Investors drove the Aussie up 0.6 percent to $1.0232 after the economy added 50,100 jobs in April, well above a median estimate of 12,000. The report helped it recover from a two-month low of $1.0155 struck on Tuesday, after Australia's central bank cut interest rates to a record low. The Kiwi rose 0.7 percent $0.8460 after data showed unemployment falling to a three-year low in the March quarter and a hefty increase in full-time jobs. The currency had hit a trough of $0.8360 on Wednesday after the Reserve Bank of New Zealand confirmed it had intervened to cap what it saw as an overvalued currency. Link this Share this Digg this Email Reprints

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