Euro holds firm vs dollar after upbeat U.S. data

TOKYO - The euro held firm against the dollar on Tuesday after hitting its highest in eight weeks the previous day when a jump in U.S. new-home sales encouraged investors to seek riskier assets.

By (Reuters)

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Published: Tue 28 Jul 2009, 7:15 AM

Last updated: Thu 2 Apr 2015, 8:30 AM

Seeking to gauge investor risk appetite, the currency market will keep an eye on Tokyo’s Nikkei share average after it gained for a ninth straight day on Monday, dealers said.

They noted that a dip in the Nikkei and U.S. stock futures during early Asia trade prompted investors to take profits in commodity-linked currencies.

Data showed on Monday that U.S. home sales surged in June, a sign the U.S. housing market may have hit bottom. “The general market tone for a softer dollar and yen remain unchanged amid a solid performance for stocks. Investors are opting for riskier assets,” said Kazuyuki Kato, treasury deparment manager at Mizuho Trust & Banking.

Investors were also bracing for Tuesday’s $42 billion sale of two-year Treasury notes, part of this week’s record $115 billion worth of debt auctions.

“Treasury auctions are underway and investors are continuing to watch what is being discussed between the U.S. and China, so it will probably be hard to build large positions,” said Yuji Saito, head of FX sales department at Societe Generale.

U.S. officials reassured their counterparts from China on Monday that the U.S. would return to a more sustainable fiscal situation and the two sides grappled over currency policies in high-level talks, senior Obama administration officials said.

The euro was steady at $1.4233 after touching $1.4299 on trading platform EBS on Monday, its highest since early June. Profit-taking could emerge when the euro rises towards $1.43, dealers said.

Against the yen, the euro slipped 0.2 percent to 135.31 yen after hitting a three-week high of 136.11 yen on EBS the previous day.

The dollar edged down 0.1 percent to 95.12 yen but was not far from a three-week peak of 95.39 yen.

Investors are looking ahead to the Standard & Poor’s Case/Shiller Home Price Index for May later Tuesday. Economists in a Reuters survey expect a decrease of 0.5 percent after a 0.6 percent fall in the April index.

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