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FOREX-Dollar edges up, boosted by gains vs euro

Published 11/12/2009, 08:09 AM
Updated 11/12/2009, 08:12 AM

* Dollar edges up, euro pares prior gains

* APEC ministers to call for "market-oriented" forex rates

* Aussie dollar hits 15-month high after local jobs data

LONDON, Nov 12 (Reuters) - The dollar rose against the euro on Thursday as the single European currency fell prey to profit-taking following its latest failure to cement a break above the key $1.50 level.

The euro slipped to the day's low of $1.4905, according to Reuters data, just under technical support around $1.4920. Still, the single currency held close to that support level, as the dollar remained on the back foot on expectations U.S. interest rates will remain low for months.

With little in the way of major economic data and events scheduled for the European and U.S. sessions, players were focused on a meeting of Asia-Pacific leaders and other Asian regional issues, including a visit to China next week b U.S. President Barack Obama.

The latest draft of a post-meeting communique from APEC finance ministers called for "market-oriented" exchange rates and interest rates -- effectively an argument for local currencies to appreciate against the dollar. [ID:nSP423373]

Some analysts said the focus on Asian currencies was also a factor capping gains in the euro on Thursday.

Pressure on China and other Asian countries to revalue their currencies "could take away some of the upside pressure on the euro," said Marcus Hettinger, currency strategist at Credit Suisse in Zurich.

The euro offered limited reaction to a slight rise in euro zone industrial output, which affirmed the view that Friday data would show the 16-member bloc officially emerging from recession.

By 1251 GMT, the euro was down 0.4 percent at $1.4920 . On Wednesday, it rose as high as $1.5049 on trading platform EBS.

The dollar index <.DXY>, a gauge of the greenback's performance against six major currencies, rose 0.3 percent on the day to 75.368. It hit a 15-month low of 74.774 on Wednesday.

The dollar was flat at 89.80 yen .

The Australian dollar slipped slightly on the day, but stayed near a 15-month high of $0.9370 hit in early trade after strong Australian jobs data again fuelled bets for a rise in interest rates in December. [ID:nSYD490561] [ID:nSYD474270]

CHINA CHANGES

China's central bank, which holds the world's largest foreign exchange reserves stash of more than $2 trillion, said on Wednesday it would consider major currencies in guiding the yuan, suggesting a departure from an effective dollar peg that has been in place for more than a year. [ID:nPEK347415]

Analysts said the move was Beijing's clearest signal yet that it was close to letting the yuan appreciate after an 18-month hiatus that has frustrated many of its peers.

"The message we draw from the shift in the (Chinese central bank's) carefully chosen words is that trend decline in the dollar will no longer be resisted to the same degree," Westpac said in a research note.

"We expect greater movement on dollar/yuan soon, quite possibly ahead of Obama's meetings with top Chinese officials next week and with a European delegation also arriving in China before year-end," they said.

Market participants expect currencies to be discussed during Obama's visit to China next week.

(Editing by Nigel Stephenson)

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