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FOREX-Dollar rises broadly. Greece debt woes hurt euro

Published 01/15/2010, 01:45 PM
Updated 01/15/2010, 01:48 PM
EUR/GBP
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EUR/JPY
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* U.S. dollar lifted by inflation, manufacturing data

* Greece debt woes weigh on euro

* Euro/dollar may be headed to $1.4280 (Recasts, updates prices, adds detail)

NEW YORK, Jan 15 (Reuters) - The U.S. dollar rose across the board on Friday, helped by U.S. reports indicating a rise in manufacturing and stable consumer price inflation, while the euro remained pressured by concerns about the Greek economy.

Market confidence in Greece has fallen as its deficit has ballooned and credit ratings have been cut. For more see [ID:nLDE60D1N0].

"What is really crushing the euro is additional concern about the serviceability of the massive amount of debt rung up in Greece," said Dan Cook, a senior market analyst at IG Markets in Chicago.

Until the issue is resolved, "we will likely see a lot of selling pressure on the euro," he said.

Analysts said Friday's string of U.S. data releases were mostly in line with expectations, showing some improvement in a regional manufacturing indicator and tame consumer prices, while a measure of consumer sentiment was little changed. [ID:nN14198653], [ID:nN15208010], [ID:nN15218367] and [ID:nN15147344]

Still, the data may help pave the way for further gains in the dollar, they said.

"It's not a surprise to see better-than-expected manufacturing data. A point of this recovery, outside of fiscal stimulus, is that the U.S. manufacturing sector is already on the rebound," said Michael Woolfolk, a senior currency strategist at BNY Mellon in New York.

He said euro/dollar may trade as low as $1.4280 in the coming days.

In midafternoon trading in New York, the euro fell 0.9 percent to $1.4377 after touching a session low of $1.4357, according to Reuters data.

BEARISH SENTIMENT

Matthew Strauss, a senior currency strategist at RBC Capital Markets in Toronto, said sentiment on euro/dollar is bearish and a recent break below $1.4450 was "quite important."

"We will probably continue to see euro/dollar slowly drifting lower," he said.

The euro also fell versus sterling to hit a four-month low of 88.11 pence before recovering some losses to trade down 0.3 percent at 0.8849.

Against the Japanese currency, the euro was 1.3 percent lower at 130.52 yen .

The single currency had fallen sharply in Asia on rumors, later denied, that German Chancellor Angela Merkel would resign. These followed the publication of a Time magazine report about her domestic political problems. [ID:nLDE60E05K]

The dollar fell to 90.61 yen earlier, its lowest since Dec. 21, according to Reuters data, as the yen gained broadly on the back of a slide in higher-yielding currencies, which suffered from investors cutting back risky positions.

The dollar was last 0.4 percent lower at 90.80 yen.

The Australian and the New Zealand dollars fell against the their U.S. counterpart .

U.S. financial markets will be closed on Monday for the Martin Luther King Day holiday.

(Additional reporting by Steven C. Johnson and Wanfeng Zhou in New York, and Tamawa Desai in London) (Reporting by Nick Olivari and Vivianne Rodrigues; Editing by Dan Grebler)

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