Forex - EUR/USD gains as storm-fueled demand for safe-haven dollar ebbs

Published 10/30/2012, 07:51 PM
Updated 10/30/2012, 07:53 PM
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Investing.com - The euro firmed against the dollar on Wednesday after investors who remained hunkered down in safe-haven dollar positions to ride out the massive storm Sandy sold the greenback to invest elsewhere.

Lower borrowing costs in Italian government bond auctions boosted the euro as well.

In Asian trading on Wednesday, EUR/USD was trading up 0.05% at 1.2964, up from a session low of 1.2887, and off from a high of 1.2983.

The pair is likely to find support at 1.2886, Tuesday's low, and resistance at 1.3023, Thursday's high.

The U.S. Atlantic seaboard continued to assess the damage that Sandy inflicted.

The storm roared ashore along the New Jersey coast on Monday as a monster post-tropical system, lashing the heavily populated northeastern U.S. with heavy rains, high winds and a deadly storm surge.

Markets were closed for a second day in the U.S. on Tuesday, though investors sold dollars and prepped for life to return to normal soon, which sent higher yielding currencies higher.

The single currency also strengthened after Italy saw borrowing costs fall to their lowest levels since May 2011 at a government auction of five- and ten-year debt.

Capping the euro's gains, however, were German official data showed that the number of unemployed in Germany rose by 20,000 in October, compared to expectations for an increase of 10,000.

The German unemployment rate rose to 6.9%, matching September’s rate, which was revised up from 6.8%.

The Spanish economy contracted by 0.3% in the third quarter, slightly better than expectations for 0.4% contraction, though the country still remains mired in recession.

The euro, meanwhile, was up against the pound and up against the yen, with EUR/GBP trading up 0.02% at 0.8064, and EUR/JPY trading up 0.08% at 103.28.

The Bank of Japan on Tuesday decided to expand its asset-purchasing program to JPY91 trillion from JPY80 trillion to further stimulate the economy.

Later Wednesday, the eurozone will release preliminary data on consumer price inflation as well as unemployment data.

In addition, Germany is to produce data on retail sales.

In the U.S., payroll processing firm ADP is to release a report on nonfarm payrolls, a leading indicator of private sector job creation. The U.S. is also to publish official data on manufacturing activity in Chicago, as well as data on employment costs and crude oil stockpiles.









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