Monday May 18, 05:53 PM
Euro rises over dollar as investor optimism gains
LONDON (AFP) - The euro rose against the dollar and the yen in late trading in London on Monday as investor confidence gained despite a week of more depressing data on the global economy.
The euro was changing hands at 1.3499 dollars compared with 1.3490 dollars late on Friday. The European single currency was also up against the Japanese yen at 129.32 yen against 128.45 previously.
The dollar was up against the yen at 95.82 yen from 95.19 on Friday.
The euro is generally considered a risky bet on currency markets and therefore gains at times when there is greater perceived economic stability, while the dollar and the yen are seen as safe havens in troubled times.
At the start of the trading day, the euro was still down after growth figures on Friday that showed the eurozone economy shrinking a record 2.5 percent in the first quarter including minus 3.8 percent for Germany.
Analysts at US bank Citigroup (NYSE: C - news) said the euro would continue to suffer.
"Weak prospects for economic growth in the eurozone, together with re-emerging concerns about the region?s banking sector and a dissatisfying policy response will likely continue to weigh on the euro in the short term," they said.
Some analysts said the volatility in currency markets was coming to an end, with fewer sharp turns between riskier currencies such as the euro and the pound and safer currencies such as the dollar, the yen and the Swiss franc.
"We do not expect a constellation of that nature to last, in particular not in a world that may remain in a deep recession but that is unlikely to collapse totally now," analysts at Germany's Commerzbank (Xetra: 803200 - news) said in a research note.
But other analysts were more downbeat, saying that conflicting signs on the economy would continue and would therefore impact on currency markets.
"For those beholden to economic releases, the frustrations for the week ahead are likely to remain little changed," said Daragh Maher, an analyst at French investment bank Calyon.
"The gloom of backward looking data such as GDP (gross domestic product) and employment statistics continues to battle with the early signs of improvement in the less tangible measures of confidence and sentiment.
"The rally in equity markets during March and April may hint that the optimists have won, but the fact that this has now petered out instead suggests that we have merely removed the extreme pessimism from the market."
In London trade on Monday, the euro was changing hands at 1.3499 dollars against 1.3490 dollars late on Friday, at 129.32 yen (128.45), 0.8814 pounds (0.8888) and 1.5121 Swiss francs (1.5132).
The dollar stood at 95.82 yen (95.19) and 1.1200 Swiss francs (1.1211).
The pound was at 1.5315 dollars (1.5176).
On the London Bullion Market, the price of gold nudged upwards to 929.75 dollars an ounce from 929.50 dollars an ounce late on Friday.
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