Euro dips after rally against dollar

LONDON - The euro slipped against the dollar and the yen on Tuesday as investors locked in gains from a recent rally in risky currencies, traders said.

By (AFP)

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Published: Tue 4 Aug 2009, 5:53 PM

Last updated: Thu 2 Apr 2015, 8:29 AM

In late morning trading here on Tuesday, the European single currency fell to 1.4384 dollars from 1.4411 dollars in New York late on Monday.

Against the Japanese currency, the dollar dropped to 94.56 yen from 95.23 yen late Monday.

The euro had soared above 1.44 dollars on Monday, scraping an eight-month high, as a series of positive economic data in the US, Europe and China encouraged risk taking.

The euro is seen as a higher-risk investment than the dollar and tends to strengthen in times of increasing confidence.

“Prospects for the dollar point to continued downside,” Citi analysts said in a note to clients published on Tuesday.

“Recovering risk appetite, a muted yield response, potential upside surprises from employment data later this week and supportive technical conditions suggest further depreciation.”

Traders suggested the euro had been over-bought on Monday and were growing jittery ahead of key US economic reports, including monthly jobs data due on Friday.

“With a lot of US economic indicators due out this week, there’s some concern over negative surprises, so some players thought that the euro had been bought a bit too much earlier,” a foreign exchange dealer told Dow Jones Newswires.

Meanwhile signs of an improvement in the US and Chinese manufacturing sectors have provided a boost to sentiment.

“The catalyst for broad-based declines in the dollar were economic reports (published Monday) consistent with hopes for a global economic recovery,” said NAB Capital analyst John Kyriakopoulos.

The market was meanwhile also awaiting latest monetary policy meetings due this week from the European Central Bank and Bank of England. Analysts widely expect the ECB and BoE to leave their key interest rates at record-low levels of 1.0 percent and 0.5 percent respectively.

However they may announce moves to increase lending to help the economic recovery, according to experts.

In London on Tuesday, the euro was changing hands at 1.4384 dollars against 1.4411 dollars late on Monday, at 136.19 yen (137.29), 0.8498 pounds (0.8508) and 1.5272 Swiss francs (1.5266).

The dollar stood at 94.56 yen (95.23) and 1.0599 Swiss francs (1.0588).

The pound was at 1.6956 dollars (1.6933).

On the London Bullion Market, the price of gold fell to 954.46 dollars an ounce from 959.75 dollars an ounce late on Monday.

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