Euro gains, yen weak as market resumes risk-taking
Sunday, 26 August 2007
NEW YORK, Aug 25 (AFP): The dollar fell against the euro yesterday while the yen weakened further as many investors switched back into risk-taking mode amid calmer global financial markets.
The euro surged as high as 1.3681 dollars-a high point last seen on August 13 -- before settling at 1.3677 dollars at 2100 GMT. That compared with 1.3566 dollars in New York late Thursday.
The dollar rose to 116.41 yen, from 116.28 yen Thursday.
In late New York trade, the dollar stood at 1.2007 Swiss francs from 1.2069 Thursday.
The pound was being traded at 2.0137 dollars after 2.0059.
The euro maintained its level despite reports showing better than expected US new home sales and durable goods orders.
Analysts said the data has yet to take into account the recent credit troubles, and so worse surveys could come later this year as lending standards tighten and mortgage rates rise.
Analysts said a rebound in troubled stock markets encouraged traders to resume so-called carry trades, which involve selling of low-yielding currencies such as the yen for higher returns.
Recent stock market turmoil saw the euro fall as low as 1.3360 dollars last week as the dollar drew strength from its status as a safe haven in times of global financial uncertainty.
However, this week's modest recovery in equities has pushed the dollar lower, dealers said.
Analysts also pointed out that both the euro and the pound have maintained their strength because expectations still stand that both European Central Bank and the Bank of England could raise interest rates again this year.
Global markets have taken a beating this month on fears that damage from default US "subprime" mortgages-loans to customers with patchy credit histories-will disrupt lending by banks.
Most investors expect the US Federal Reserve to cut American borrowing costs from the current level of 5.25 per cent at its next planned policy meeting in September.
In contrast, the European Central Bank appears set to hike eurozone- wide interest rates next month by a quarter-point to 4.25 per cent.
The euro surged as high as 1.3681 dollars-a high point last seen on August 13 -- before settling at 1.3677 dollars at 2100 GMT. That compared with 1.3566 dollars in New York late Thursday.
The dollar rose to 116.41 yen, from 116.28 yen Thursday.
In late New York trade, the dollar stood at 1.2007 Swiss francs from 1.2069 Thursday.
The pound was being traded at 2.0137 dollars after 2.0059.
The euro maintained its level despite reports showing better than expected US new home sales and durable goods orders.
Analysts said the data has yet to take into account the recent credit troubles, and so worse surveys could come later this year as lending standards tighten and mortgage rates rise.
Analysts said a rebound in troubled stock markets encouraged traders to resume so-called carry trades, which involve selling of low-yielding currencies such as the yen for higher returns.
Recent stock market turmoil saw the euro fall as low as 1.3360 dollars last week as the dollar drew strength from its status as a safe haven in times of global financial uncertainty.
However, this week's modest recovery in equities has pushed the dollar lower, dealers said.
Analysts also pointed out that both the euro and the pound have maintained their strength because expectations still stand that both European Central Bank and the Bank of England could raise interest rates again this year.
Global markets have taken a beating this month on fears that damage from default US "subprime" mortgages-loans to customers with patchy credit histories-will disrupt lending by banks.
Most investors expect the US Federal Reserve to cut American borrowing costs from the current level of 5.25 per cent at its next planned policy meeting in September.
In contrast, the European Central Bank appears set to hike eurozone- wide interest rates next month by a quarter-point to 4.25 per cent.