Wednesday April 22, 12:06 PM
Euro weakens on worries over US banks
LONDON (AFP) - The euro slipped Wednesday against the dollar as investors awaited the results of Washington's "stress tests" of the viability of top US banks while the pound weakened ahead of the British budget.
The European single currency fell to 1.2924 dollars from 1.2950 dollars late in New York on Tuesday.
Against the Japanese currency, the dollar declined to 98.26 yen from 98.69 yen on Tuesday.
Sterling sank as traders awaited British finance minister Alistair Darling's key budget statement due at 1130 GMT in parliament.
Meanwhile, the yen climbed against major rival currencies on safe-haven demand as Tokyo.
Investors were waiting for the results of Washington's test of the health of the top 19 US banks to see if more government aid will be needed to keep the US financial system afloat, analysts said.
"For now, the key focus in the foreign exchange market will be on the upcoming stress test results from the US authorities," said economist Derek Halpenny at The Bank of Tokyo-Mitsubishi UFJ in London.
"Euro/dollar is turning lower again as yield, volatility and crude oil prices work against the euro."
The euro rose on Tuesday after Germany's ZEW economic sentiment index posted its first positive reading since July 2007, pointing to a possible pickup in the eurozone's largest economy in the second half of 2009.
In recent months, the dollar and yen have benefited from "risk aversion" during times of market turmoil, while the euro is seen as more vulnerable to the economic downturn.
A US blog said leaked results of the stress tests showed 16 of the 19 banks to be "technically insolvent." Although this was denied by the US Treasury, dealers said it was affecting sentiment.
The market appeared to shrug off Japanese trade data suggesting that an export slump eased in March, even though overseas demand remained very weak.
In London trade on Wednesday, the euro was changing hands at 1.2924 dollars against 1.2950 dollars late on Tuesday, at 127.01 yen (127.82), 0.8881 pounds (0.8818) and 1.5115 Swiss francs (1.5117).
The dollar stood at 98.26 yen (98.69) and 1.1693 Swiss francs (1.1672).
The pound was at 1.4556 dollars (1.4686).
On the London Bullion Market, the price of gold fell to 885.21 dollars an ounce from 888.75 dollars an ounce late on Wednesday.
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