Reuters: US Dollar Report: FOREX-Euro pares gains after PMI data, off 2-year high vs dollar

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FOREX-Euro pares gains after PMI data, off 2-year high vs dollar Oct 24th 2013, 08:39 Share this Email Print Reprints Thu Oct 24, 2013 4:39am EDT * Euro hits 2-year high versus weak dollar * Then pares gains after below-forecast euro zone PMI data * Better China data helps riskier currencies * Dollar stays weak on expectations of delay in Fed taper By Jessica Mortimer LONDON, Oct 24 (Reuters) - The euro was steady against the dollar on Thursday after disappointing euro zone data pulled it away from a two-year high struck earlier in the session. Purchasing managers' surveys for the euro zone showed the pace of growth in business activity eased unexpectedly this month, suggesting the region's recovery may be less solid than previously thought. The euro was last steady at $1.3772, having earlier risen as high as $1.3824, its strongest since November 2011, with traders saying it extended gains after surpassing a reported options barrier at $1.38 and as upbeat China data lifted riskier currencies. Expectations that the U.S. Federal Reserve will maintain its stimulus programme into next year also weighed on the dollar. "The market is still focused on the Fed, but the disappointing tone of the euro zone data will suggest that the euro is looking toppy up here and this should keep euro/dollar in check," said Jane Foley senior currency strategist at Rabobank. She said Thursday's peak of $1.3824 could now act as stiff resistance for the euro. Beyond there, further resistance stood at the Nov. 4 high of $1.3870. A break above there would leave it on course to test the psychological $1.40 level. A purchasing managers' survey (PMI) on Chinese manufacturing activity hit a seven-month high in October, buoyed by strong new orders and raising optimism that the world's second-biggest economy may be recovering from a slow patch. This lifted riskier currencies such as the euro as well as the Australian dollar. The dollar fell broadly, hitting a near nine-month low against a basket of currencies on rising expectations the Federal Reserve will delay reducing its bond-buying programme until into next year. Weak U.S. jobs data on Tuesday suggested the U.S. recovery was not yet on a firm footing and a drop in the 10-year U.S. Treasury yield on Wednesday to a three-month low further dented the dollar's appeal. The dollar index was last at 79.236, having dropped to as low as 79.081. The dollar, however, held steady against the yen at 97.38 yen, hovering just above a two-week low of 97.15 yen set on Wednesday and chart support at 97.31 yen, the 200-day moving average. The Australian dollar was last steady at $0.9618, also paring gains after an earlier boost from the China data. Analysts said concerns remained about rising money market rates in China. On Thursday, China's benchmark seven-day repo rate rose nearly a full percentage point after China's central bank let cash flow out of the money market for the second straight week. "The Chinese (PMI) numbers this morning have helped turn sentiment around slightly but there are still concerns about money market conditions," said Mitul Kotecha, head of global foreign exchange strategy for Credit Agricole in Hong Kong. Link this Share this Digg this Email Reprints

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