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Forex - Euro claws higher but outlook remains clouded

Published 01/03/2012, 06:04 AM
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Investing.com - The euro was higher against most of its major counterparts on Tuesday, as stronger market sentiment boosted demand for higher yielding assets but the single currency remained under pressure amid concerns over European sovereign debt issues.

During European late morning trade, the euro was up against the U.S. dollar, with EUR/USD advancing 0.80% to hit 1.3038.

The euro was bolstered after data showed that Chinese manufacturing activity returned to expansionary territory last month after contracting in November, easing concerns over a slowdown in the world’s second largest economy.

Earlier Tuesday, official data showed that the number of unemployed people in Germany fell more-than-expected in December, while the country’s jobless rate dropped to a record low.

But sentiment on the euro remained fragile amid fears over the risk of sovereign debt downgrades across the shared currency zone, as investors looked ahead to bond auctions by Germany and France later in the week to gauge borrowing conditions in the region.

The euro was also higher against the pound, with EUR/GBP climbing 0.32% to hit 0.8364.

A report earlier showed that manufacturing activity in the U.K. unexpectedly improved in December, but remained in contraction territory for the third consecutive month.

Against the yen, the single currency rose 0.57% to trade at 100.02, after falling to as low as 99.35 in holiday-thinned trade on Monday, the lowest level since December 2000.

The euro was almost unchanged against the Swiss franc, with EUR/CHF inching up 0.05% to hit 1.2162.

In Switzerland, a report earlier showed that manufacturing activity increased more-than-expected in December, returning to expansionary territory after contracting in the three previous months.

Elsewhere, the euro remained close to an all-time low against the Australian dollar, with EUR/AUD shedding 0.21% to hit 1.2611. Meanwhile, EUR/CAD eased up 0.04% to trade at 1.3184 while EUR/NZD lost 0.42% to hit 1.6545.

Later Tuesday, the U.S. Institute of Supply Management was to publish a report on manufacturing activity, while the Federal Reserve was to publish the minutes of its December policy meeting.


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