FOREX-Contrasting data gives euro upper hand vs dlr

Reuters: [2008-05-16 13:13:00]

(Changes byline, updates prices, adds quotes)

By Veronica Brown

LONDON, May 16 (Reuters) - The dollar drifted down versus the euro on Friday, pressured by the contrast between Thursday's weak U.S. jobs and manufacturing data and forecast-beating growth figures from the euro zone.

The U.S. data injected a hint of doubt into market expectations that the Federal Reserve's aggressive cycle of interest rate cuts is over.

Further clues on the depth of the U.S. economic slowdown will come on Friday from April housing starts and building permits numbers at 1230 GMT and the May Reuters/University of Michigan consumer sentiment index at 1355 GMT. All three measures are seen weaker.

By contrast, Thursday's strong first-quarter growth figures from Germany and France boosted the euro as they highlighted the relative strength of the European economy compared with the United States.

The dollar also slipped versus the yen after Japanese data showed growth of 0.8 percent in the first three months of this year, above market expectations for a 0.6 percent increase [ID:nT210001].

Credit Suisse currency strategist Adam Myers said that while there were rising expectations that Europe's economy would slow, the problems in the U.S. were far from over.

"I'm very much in the camp where I think the dollar will probably weaken further from here. Europe is not going to be anywhere as badly affected with a continuing slowdown in the real economy as the U.S. is," he said.

"Europe will slow down but its slowdown is not going to have the same impact on financial markets and lending and therefore consumers than it will in the U.S."

By 1032 GMT the euro was 0.1 percent higher at $1.5470 <EUR=>. Against the yen the euro rose to 162.04 yen <EURJPY=>. The dollar was flat at 104.75 yen, having earlier fallen to 104.16.

MORE BAD NEWS?

The dollar index, which tracks the greenback's performance against a basket of major currencies was a touch weaker at 73.298, trimming earlier losses <.DXY>.

The index hit a two-month high of 73.895 last week thanks to steady gains in U.S. stocks, rising U.S. bond yields and a growing view that the worst of the credit crisis may be over.

However, the improved confidence in the U.S. economy has taken a slight knock this week with a smaller than expected rise in U.S. consumer prices.

Data on Thursday showed the number of workers claiming unemployment benefit hit a four-year high while factory activity was weak in the U.S. mid-Atlantic and in New York state [ID:nN15515443].

"(Friday's) U.S. economic news is unlikely to offer much better news; April housing starts and building permits are set to remain weak whilst Michigan confidence will fall further despite already dropping to multi-year lows," Calyon said in a note.

"The market interest to re-establish positions in EUR/USD remains limited at present. Nonetheless, weaker data today could see euro push back towards the top of the range towards $1.56."

Elsewhere, Iceland's central bank struck a deal with its counterparts in Sweden, Norway and Denmark allowing it to buy euros with Icelandic crowns, giving the island's beleaguered currency a strong boost [ID:nL16579130].

The crown surged 4.5 percent against the euro <EURISK=>.

Analysts said the bank was thought to be talking to other central banks about possible further measures.

(Reporting by Veronica Brown; Editing by Ian Jones)

((RM:veronica.brown.reuters.com@reuters.net; Tel: +44 207 542 6745))

Currency bid prices at 1057 GMT.  All data taken from Reuters 
with percent change calculated from the daily U.S. 
close at 2130 GMT. 
 
                       Last     US Close  % Chg   YTD %   2007 
                                15 May.                   Close 
                       ----------------------------------------- 
 Euro/dlr   <EUR=>     1.5456   1.5443   +0.08    +5.94   1.4589 
 Dlr/yen    <JPY=>     104.76   104.68   +0.08    -5.90   111.33 
 Euro/yen   <EURJPY=>  161.92   161.61   +0.19    -0.38   162.53 
 Dlr/swiss  <CHF=>     1.0566   1.0567   -0.01    -6.78   1.1335 
 Stg/dlr    <GBP=>     1.9476   1.9475   +0.01    -1.87   1.9847 
 Dlr/cad    <CAD=>     1.0006   0.9994   +0.12    +0.42   0.9964 
 Aus/dlr    <AUD=>     0.9447   0.9396   +0.54    +7.88   0.8757 
 NZD/Dlr    <NZD=>     0.7671   0.7628   +0.56    +0.07   0.7666 
 Euro/swiss <EURCHF=>  1.6328   1.6314   +0.09    -1.28   1.6539 
 Euro/stg   <EURGBP=>  0.7933   0.7928   +0.06    +7.95   0.7349 
 Euro/sek   <EURSEK=>  9.3370   9.3178   +0.21    -0.99   9.4304 
 Dlr/Nok    <NOK=>     5.0884   5.0931   -0.09    -6.37   5.4347 
Latest forex developments <FXNEWS>    
 All forex news ... [FRX]  Debt...[DBT] Indicators...[ECI] 
 Currency reports.. [USD/] [DLR/BLOC] 
                    [GBP/] [AUD/] [NZD/] [CAD/] 
 All spots  <FX=> 
 Tokyo spots <AFX=> 
 Europe spots <EFX=> 
 Volatilities <FXVOL> 
 Tokyo Forex market info from BOJ <TKYFX> 
 World central bank news [CEN] 
 Economic Forecasts...<ECON>   Official rates...[INT/RATE] 
 Forex Diary.......[MI/DIARY]   Top events........[M/DIARY] 
 Diaries...........[DIARY] Diaries Index........[IND/DIARY] 
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Icelandic crown jumps on swap pact

Reuters: [2008-05-16 11:18:00]

LONDON, May 16 (Reuters) - The Icelandic crown jumped against the dollar and euro on Friday after Sweden's central bank said it and its Norwegian and Danish counterparts entered into a swap facility with Iceland's central bank.

By 0915 GMT, the euro was down 4.38 percent on the day at 114.98 crowns <EURISK=>, while the dollar was down 4.83 percent at 74.15 <ISK=>.

"At first glance ... this of course bound to be positive news. In and of itself it's not going to solve all the concerns. But it's a very important stepping stone in displaying that the central bank is willing and has the resources to provide support," Glitnir strategist Jon Bentsson said.

(Reporting by Veronica Brown and Toni Vorboyova)

((RM:veronica.brown.reuters.com@reuters.net; Tel: +44 207 542 6745))

FOREX-Data contrast knocks dollar vs euro, yen

Reuters: [2008-05-16 09:59:00]

(Changes dateline, byline, updates prices, adds quotes)

By Toni Vorobyova

LONDON, May 16 (Reuters) - The dollar eased versus the yen and the euro on Friday, pressured by the contrast between signs of a deteriorating U.S. jobs and manufacturing picture with forecast-beating growth figures from the euro zone and Japan.

The weak U.S. data on Thursday cast a shadow of doubt on market expectations that the Federal Reserve's aggressive cycle of interest rate cuts is over.

Further clues on the depth of the U.S. economic slowdown will come from April housing starts and building permits numbers at 1230 GMT and the May Reuters/University of Michigan consumer sentiment index at 1355 GMT. All three measures are seen weaker.

In contrast, Japanese data showed quarterly economic growth of 0.8 percent in the first three months of this year, above market expectations for a 0.6 percent increase [ID:nT210001].

That gave an annualised rise of 3.3 percent -- compared to just 0.6 percent in the United States in the same period.

"The Japanese GDP numbers released overnight were really, really good ... absolutely exceeding the U.S. growth in the same period," said John Hydeskov, senior FX analyst at Danske Markets in Copenhagen.

"The yen should strengthen against the U.S. dollar in the coming months ... because we still think that we are about to see some really bad business indicators out of the U.S. and more bad housing data, and also due to the fact that the Japanese economy is not looking as bad as feared by some market participants."

By 0740 GMT, the dollar was down a third of a percent at 104.34 yen <JPY=>.

The euro was 0.2 percent higher at $1.5471 <EUR=>. Against the yen, the single European currency eased a touch to 161.44 yen <EURJPY=>.

Strong first-quarter growth in Germany and France helped support the euro as the data highlighted the relative strength of the European economy compared with that of the United States.

Traders said currency moves were accentuated by thin market conditions.

"I think (the market is) so scrappy as no one wants to play," said a trader in London.

MORE BAD NEWS?

The dollar index, which tracks the greenback's performance against a basket of major currencies, fell 0.2 percent to 73.191 <.DXY>.

The index hit a two-month high of 73.895 last week thanks to steady gains in U.S. stocks, rising U.S. bond yields and a growing view that the worst of the credit crisis may be over.

However, the improved confidence in the U.S. economy was slightly shaken on Thursday after data showed the number of workers claiming unemployment benefit hit a four-year high while factory activity was weak in the U.S. mid-Atlantic and in New York state [ID:nN15515443].

"Today's U.S. economic news is unlikely to offer much better news; April housing starts and building permits are set to remain weak whilst Michigan confidence will fall further despite already dropping to multi-year lows," Calyon said in a note.

"The market interest to re-establish positions in EUR/USD remains limited at present. Nonetheless, weaker data today could see euro push back towards the top of the range towards $1.56." (Editing by Stephen Nisbet) ((antonina.vorobyova@reuters.com; Tel: +44207 542 7958, Reuters Messaging: antonina.vorobyova.reuters.com@reuters.net))

Sterling hits days highs as technical levels breached

Reuters: [2008-05-16 09:16:00]

LONDON, May 16 (Reuters) - Sterling rose to days highs versus the dollar on Friday with traders citing technical levels around $1.95 being taken out.

The pound hit an intra-day high of $1.9523 as traders said stops around Thursday's highs were breached above the $1.95 area.

"It's just stops going through $1.9500, $1.9510," said a trader in London."

By 0712 GMT the pound was up 0.2 percent at $1.9511 <GBP=> beyond the high on Thursday of $1.9501.

(Reporting by Toni Vorobyova and Simon Falush) ((simon.falush@reuters.com. +44 20 7542 7681) Reuters Messaging: simon.falush.reuters.com@reuters.net))

Keywords: MARKETS FOREX/STERLING

Euro wipes gains vs dlr after Trichet comments

Reuters: [2008-05-15 13:44:00]

LONDON, May 15 (Reuters) - The euro wiped earlier gains versus the dollar on Thursday after European Central Bank President Jean-Claude Trichet warned that second-quarter growth in the single currency zone would be "less flattering."

By 1138 GMT, the euro had erased earlier gains made after robust first quarter German and euro zone GDP data to trade flat on the day at $1.5479 <EUR=>.

"Despite the strong German data, the overall outlook for euro zone growth in the coming quarters suggests a slower period," said David Page, economist at Investec.

"It's also a reminder of the some of the downside risks to inflation," he added.

(Reporting by Naomi Tajitsu and Veronica Brown)

((RM:veronica.brown.reuters.com@reuters.net; Tel: +44 207 542 6745))

Keywords: MARKETS FOREX/EURO