NVDA Q3 Earnings Alert: Why our AI stock picker is still holding Nvidia stockRead More

FOREX-Dollar flat vs euro; aussie, kiwi jump

Published 12/10/2009, 02:23 PM
Updated 12/10/2009, 02:27 PM

* Investors shrug off U.S. trade and jobless data

* Greece, Spain worries still weigh on euro

* Aussie, kiwi gain on rate hike prospects

* BoE holds rates, SNB keeps FX intervention threat (Updates prices, adds details, comments)

NEW YORK, Dec 10 (Reuters) - The dollar was unchanged against the euro on Thursday despite concern about euro zone deficits while Australia and New Zealand's currencies soared as strong economic data hinted at further interest rate rises.

The yen fell after separate reports showed the U.S. trade deficit narrowed in October while the four-week moving average of U.S. jobless claims fell for a 14th straight week.

Those reports boosted hopes that the U.S. economy continued to improve and encouraged modest moves into stocks and other such relatively risky assets, which are often financed by borrowing the Japanese yen at low interest rates.

But the euro struggled as markets fretted about the weaker links in the euro zone economy, including Greece and Spain. Fitch dropped the former's credit rating this week below the single-A bracket for the first time in 10 years while Standard & Poor's cut Spain's outlook to negative.

"Increased sovereign risk will see some headwinds associated with the euro," said Omer Esiner, senior market analyst at Travelex Global Business Payments in Washington.

The euro was little changed at $1.4718. Against the yen, the dollar was up 0.4 percent at 88.19 yen though off the session peak of 88.45 yen.

European Central Bank Governing Council member Ewald Nowotny said on Thursday the current worries about Greece's finances would not break up the euro zone.

Still, "the euro has probably taken a bit of a hit from these internal problems in the euro zone," said Johan Javeus, currency strategist at SEB in Stockholm.

The Australian and New Zealand dollars were the top gainers on the day, surging against the dollar and yen. Strong jobs data raised anticipation of another rate hike from the Reserve Bank of Australia, which has lifted rates three times in three months. The Reserve Bank of New Zealand also signaled rates may go up sooner than markets had thought.

The Australian dollar added 1 percent against the U.S. dollar to $0.9171, while the New Zealand dollar gained 1.3 percent to $0.7280, and earlier hit its highest since late November.

"Interest rates are becoming a more important factor, and the market is looking more at fundamentals now," said You-Na Park, a Commerzbank analyst in Frankfurt.

Sterling was unchanged at $1.6258, and barely budged after a widely expected decision by the Bank of England to hold interest rates at a record low 0.5 percent and keep its asset-buying program unchanged.

The Swiss franc dipped briefly after the Swiss National Bank held interest rates steady and stuck to its pledge to fight an appreciation of the franc decisively.

This was tempered, however, as the bank dropped its offer to buy corporate bonds, the first signs it was easing drastic stimulus measures, and as SNB Chairman Jean-Pierre Roth said the franc had stayed stable versus the euro. (Additional reporting by Nick Olivari and Wanfeng Zhou in New York and Jessica Mortimer in London; Editing by James Dalgleish)

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.