Thursday May 28, 12:11 PM
Euro falls despite positive eurozone data
LONDON (AFP) - The European single currency dropped against the dollar Thursday on concerns about the eurozone economy and despite data showing the bloc's business and consumer confidence at a six-month high in May.
In London trade, the European single currency fell to 1.3853 dollars from 1.3868 dollars late on Wednesday.
Against the Japanese currency, the dollar climbed to 96.65 yen from 95.28 yen late Wednesday.
Business and consumer confidence in the eurozone economy rose in May for the second consecutive month following almost two years of shakiness, an EU survey showed Thursday.
The European Commission's economic sentiment indicator for the 16-nation bloc using the euro currency rose 2.1 points from April to 69.3 points.
Last month, the figure was 67.2 points, a rise of 2.5, its first advance since May 2007.
"The confidence data suggest that both businesses and consumers are becoming more upbeat over recovery prospects following the major stimulative action and banking support measures that have been enacted both by central banks and governments," said IHS Global Insight economist Howard Archer.
"Sharply lower inflation is also clearly supporting consumer sentiment, although the upside is being limited by heightened and still rising unemployment fears."
Capital Economics analyst Daniele Antonucci added: "Unfortunately, given the sharp outright contraction (in first-quarter growth) the eurozone economy still looks set to shrink by around five percent this year."
The dollar was meanwhile rising Thursday on improved investor sentiment after credit rating agency Moody's said it saw no need to lower the triple-A sovereign debt rating of the United States.
That assessment "helped dissipate some of the recent concern" and led to a "dollar-buying mood," said Tokyo Forex and Ueda Harlow strategist Yuzo Sakai.
Markets were jittery after credit rating agency Standard and Poor's last week downgraded the outlook of Britain's sovereign debt, fuelling concerns that the United States could be the next in line.
The dollar had also been pressured in recent weeks on fears about the ballooning US budget deficit and its impact on borrowing costs in a prolonged recession.
Washington estimates a 1.84 trillion dollar deficit in fiscal 2009, which ends September 30.
In London trade on Thursday, the euro was changing hands at 1.3853 dollars against 1.3868 dollars late on Wednesday, at 134.09 yen (132.13), 0.8690 pounds (0.8674) and 1.5115 Swiss francs (1.5109).
The dollar stood at 96.65 yen (95.28) and 1.0911 Swiss francs (1.0890).
The pound was at 1.5909 dollars (1.5984).
On the London Bullion Market, the price of gold dipped to 950.58 dollars an ounce from 951 dollars an ounce late on Wednesday.
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