🚀 AI-picked stocks soar in May. PRFT is +55%—in just 16 days! Don’t miss June’s top picks.Unlock full list

FOREX-Dollar, yen fall as shares gain; German ZEW eyed

Published 08/18/2009, 04:24 AM
Updated 08/18/2009, 04:27 AM
DANSKE
-

* Dollar, yen fall vs euro, riskier FX as stocks, oil rise

* Euro up 0.3 percent vs dlr at $1.4121, up 1 percent vs yen

* Eyes on German ZEW at 0900 GMT, seen showing improvement

(Updates prices; changes byline, dateline; previous TOKYO)

By Jessica Mortimer

LONDON, Aug 18 (Reuters) - The dollar and the yen fell against the euro and perceived higher-risk currencies on Tuesday, dented by rising equity and oil prices, while investors anticipated an improvement in Germany's ZEW survey.

The ZEW investor sentiment index for August, due at 0900 GMT, is forecast to rise to 45.0 from 39.5 in July, according to a Reuters poll, on optimism over improvements in the global economy and the country's export sector.

Analysts said a firmer reading would encourage the view that the global economy is over the worst of a downturn, helping risk appetite to recover.

They added that investors were also covering short positions built the previous day in the euro and higher risk currencies such as the Australian dollar, when they fell to their lowest against the dollar and the yen in more than two weeks.

European shares rose 0.6 percent after suffering their biggest drop in six weeks during the previous session, while U.S. S&P 500 stock futures gained and oil prices also recovered .

"S&P futures are pointing higher and we are seeing a rebound in riskier currencies," said Arne Lohmann Rasmussen, head of FX research at Danske Bank in Copenhagen.

"We think the ZEW could surprise to the upside, which would confirm that a cyclical recovery is taking place, and the upbeat mood will continue," he added.

At 0800 GMT, the euro rose 0.3 percent against the dollar to $1.4121 after falling as low as $1.4045 on Monday on the EBS trading platform. Against the yen it jumped 1 percent to 134.35 yen, recovering after touching a low of 132.51 yen on Monday.

The dollar also rose 0.7 percent to 95.12 yen after dipping to its lowest in nearly three weeks on Monday at 94.19 yen.

Analysts, however, said Monday's rebound in risk appetite could be shaken in the event of disappointing economic data, with U.S. housing starts and producer prices figures also due later in the day.

"The dollar is generally softer, but risk appetite remains fragile and vulnerable to disappointment from today's batch of U.S. and European data," RBC analysts said in a note to clients. Elsewhere, sterling rose 0.3 percent to $1.6389, with investors cautious ahead of UK inflation data at 0830 GMT, which is expected to show annual CPI falling to 1.5 percent in July from 1.8 percent in June.

The higher risk Australian dollar rose 0.5 percent against the U.S. dollar to $1.8249 and by 1.3 percent against the yen to 78.50 yen.

Earlier, the Australian central bank said in the minutes to its last meeting that it would start to raise interest rates if the local economy continues to recover as forecast, and that further easing was unlikely.

Policymakers were concerned, however, that the strength of household demand could prove temporary, particularly if it tightened too early..

(Editing by Stephen Nisbet)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.