Reuters: US Dollar Report: FOREX-Euro, sterling fall vs dollar as data fails to inspire

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FOREX-Euro, sterling fall vs dollar as data fails to inspire Jul 25th 2013, 10:05 Thu Jul 25, 2013 6:05am EDT * German Ifo numbers just beat expectations * Sterling falls after in-line UK GDP numbers * NZD up, mkt sees hawkish tint in RBNZ statement By Anirban Nag LONDON, July 25 (Reuters) - The euro and sterling gave up gains against the dollar on Thursday, after German and UK data came in line with expectations and prompted some investors who had anticipated better numbers to cut positions. The euro retreated from near one-month highs against the dollar, as did sterling, with the focus now on U.S. data due later in the day. U.S. weekly initial jobless claims and durable goods data for June are due on Thursday and a good set of numbers, especially from the labour market, could set markets abuzz with expectations that the Federal Reserve may start withdrawing stimulus as early as September. That would help the dollar. The euro was down 0.1 percent at $1.3185, having hit a session high of $1.3239 after the German Ifo survey showed business morale was slightly better than expected. The influential think-tank's business climate index rose to 106.2 in July from 105.9 a month ago, just ahead of forecasts of a 106.1 reading. Sterling fell to $1.5297 after UK gross domestic product data, from $1.5371 beforehand - a shade away from a one-month peak of $1.5393. The British economy grew 0.6 percent in the second quarter, picking up from the previous quarter for an a 1.4 percent annual pace. "The Ifo numbers were not sufficiently good to spark another round of euro buying after yesterday's PMI surprise," said Chris Turner, head of FX strategy at ING. Surveys on Wednesday showed a quicker-than-anticipated expansion in German and French private sector business activity and lifted the euro to a one-month high of $1.3256. "On sterling, I think we have potentially seen the best because the market will start getting used to the Bank of England's forward guidance in coming weeks," Turner added. The Bank of England is expected to issue 'forward guidance' next month that it will keep rates low to support growth. The drop in the euro and sterling saw the dollar index recover from earlier lows. The index was flat on the day at 82.313 and off a one-month low of 81.926 set on Tuesday. Adam Myers, European head of FX strategy at Credit Agricole said the dollar is likely to gain ground if U.S. data, especially jobless claims, were better than expected. The dollar's trend has shown a high correlation to Treasury yields in recent weeks as the market has focused on when the U.S. Federal Reserve might start tapering its monetary stimulus. The New Zealand dollar was up 1.2 percent at a one-month high of $0.8033 as investors detected a more hawkish tone from the Reserve Bank of New Zealand. "There was a lot more emphasis on the potential inflation spillover from construction costs and housing market," said Jane Turner, a senior economist at ASB Bank. "We still expect the RBNZ to first lift the official cash rate in March 2014." If that prediction proves correct, New Zealand could be the first developed nation to begin a rate tightening cycle. Link this Share this Digg this Email Reprints

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