Euro rises as German confidence increases; Aussie dollar weakens

The euro (FOREX:EURUSD) rose to the highest level in more than four years versus the yen after a report showed German business confidence climbed in November, signaling the economic recovery in Europe’s largest economy is strengthening.

Australia’s dollar (FOREX:AUDUSD) fell against all of its 16 most-traded peers amid speculation the nation’s central bank will take steps to curb the currency’s strength. The yen reached a four-month low versus the dollar after Bank of Japan Governor Haruhiko Kuroda said he will do his utmost to restrict an increase in long-term yields. Sweden’s krona advanced as reports showed consumer and manufacturing confidence improved.

“I’m relatively positive on the euro,” said Simon Smith, chief economist at FxPro Group Ltd. in London. “I don’t really have the impression the actual backdrop is really that bad. Underneath, it actually has a decent tone.”

The euro gained 0.2% to 136.69 yen at 9:28 a.m. New York time after touching 136.99, the highest level since October 2009. The shared currency rose 0.3% to $1.3520, set for a second weekly advance. The dollar slipped 0.1% to 101.11 yen after reaching 101.35 yen, the strongest since July 8.

The Bloomberg U.S. Dollar Index, which tracks the currency against 10 major counterparts, fell 0.1% to 1,020.05 to pare its weekly gain to 0.3%.

Krona, Rand

Sweden’s currency rose the most in two weeks versus the euro as an index of Sweden’s consumer confidence in November rose to 104.9 from 102.0 the previous month, the National Institute of Economic Research said in statement today. Manufacturing confidence increased to 105.8 from a revised 101.7 in October.

The krona gained 0.5% to 8.9039 per euro after adding as much as 0.8%, the most since Nov. 7, and appreciated 0.7% to 6.5870 per dollar.

The rand approached a three-week high after South Africa’s central bank indicated it may raise borrowing costs as a weaker currency fuels inflation.

Governor Gill Marcus “iterated time and again in the statement about the continued risks to inflation along with a downward revision in growth, so on balance it was certainly more hawkish than we expected,” Mohammed Nalla, head of strategic research at Nedbank Group Ltd. in Johannesburg, said by e-mail.

South Africa’s currency advanced 0.4% to 10.0917 per dollar after declining 0.3% earlier, approaching the highest since Nov. 1.

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