Wednesday June 3, 12:35 PM
Euro strikes 2009 dollar high
LONDON (AFP) - The euro hit a 2009 peak against the dollar on Wednesday, before pulling back as official data confirmed the recession-hit eurozone economy shrank by 2.5 percent in the first quarter of 2009.
Elsewhere, the British pound soared to multi-month pinnacles against rival currencies as traders absorbed positive British economic data.
In early morning deals, the European single currency surged as high as 1.4338 dollars -- a level last reached on December 29, 2008 -- as dealers weighed global recovery hopes with worries over the US economy.
The unit later stood at 1.4234 dollars, down from 1.4305 late in New York on Tuesday, as the market digested the latest European data.
The single currency, regarded as a higher-risk currency than the dollar, has struck a series of 2009 dollar peaks this week as it was boosted by improving investor confidence and risk appetite.
On Thursday, the European Central Bank (ECB) makes its next monetary policy decision and will likely explores new ways to get money flowing again in the eurozone.
The Bank of England was also forecast to keep British interest rates at a record low 0.5 percent on Thursday.
"The euro continues to look very well supported against the dollar as speculative selling of the dollar fuels demand" for the single currency, said economist Derek Halpenny at The Bank of Tokyo-Mitsubishi UFJ in London.
"We have argued since the end of March that the euro would benefit from the improving signs of economic recovery in circumstances of ECB caution on non-standard monetary policy steps," he added.
But official data showed Wednesday that eurozone gross domestic product (GDP) contracted a record 2.5 percent in the first quarter and 4.8 percent over 12 months as the recession bit.
While the quarterly low confirmed figures released last month, the revised 12-month rate of economic contraction was the sharpest for the 16-nation eurozone since records began in 1995, the Eurostat agency said.
In addition, separate data showed business activity in the 16 countries using the euro hit an eight-month high thanks to a record rise in May, a survey showed on Wednesday, giving some hope that the slump may be bottoming out.
The eurozone's purchasing managers' index (PMI), compiled by data and research group Markit, rose to 44.0 points in May from 41.1 points in April, according to a revised estimate, a record monthly rise in points terms since the survey began in 1998.
Sterling meanwhile jumped to 1.1660 euros, the highest level since early December. It also struck 1.6662 dollars -- which was last seen on October 30.
The Chartered Institute of Purchasing and Supply's survey on the services sector -- which accounts for 70 percent of the economy -- showed an activity index reading stood at 51.7 in May.
That marked the first time since April 2008 that the troubled services sector has pulled into positive territory.
At the same time, British consumer confidence edged higher in May owing to rising optimism about the economy, according to research from home loan provider Nationwide.
In London trading on Wednesday, the euro was changing hands at 1.4234 dollars against 1.4305 dollars late on Tuesday, at 137.07 yen (136.95), 0.8588 pounds (0.8627) and 1.5181 Swiss francs (1.5187).
The dollar stood at 96.39 yen (95.72) and 1.0676 Swiss francs (1.0612).
The pound was at 1.6558 dollars (1.6580).
On the London Bullion Market, the price of gold edged up to 980.47 dollars an ounce from 980 dollars an ounce late on Tuesday.
|
|
|
Send Article by Email
Send Article by IM
Blog This with Y! 360
Printable View
