Dollar wobbles as euro lifted by economic outlook

Posted: 29 May 2009 0557 hrs

NEW YORK - The dollar traded mixed while the euro gained ground Thursday as signs of improving economic conditions prompted renewed risk appetite among investors.

At 2100 GMT, the European single currency was quoted at 1.3943 dollars, up from 1.3868 dollars late Wednesday.

The dollar rose to 96.77 yen from 95.28 yen.

Joel Kruger at Forex Capital Markets said the US dollar was "under pressure on the back of stable equity prices and very good euro demand."

The dollar weakened after data showed an unexpectedly strong 1.9 percent increase in US durable goods new orders in April and new US unemployment claims fell to 623,000 in the past week, a better reading than forecasted by most analysts.

"The dollar has not been trading at a championship level lately with it hitting lows not seen since last fall against most major currencies over the past few days," PNC Bank analysts said.

"Ironically it is the positive tone surrounding recent US releases -- another way of saying data has stopped getting worse -- which has investors chasing higher yields elsewhere."

Euro buying was boosted after a European Union survey showed business and consumer confidence in the eurozone rose in May for the second consecutive month following an almost two-year slide.

"The confidence data suggest that both businesses and consumers are becoming more upbeat over recovery prospects following the major stimulative action and banking support measures that have been enacted both by central banks and governments," said IHS Global Insight economist Howard Archer.

"Sharply lower inflation is also clearly supporting consumer sentiment, although the upside is being limited by heightened and still rising unemployment fears."

The European Commission's economic sentiment indicator for the 16-nation bloc rose 2.1 points from April to 69.3 points. Last month, the figure was 67.2 points, a rise of 2.5, its first advance since May 2007.

In late New York trade, the dollar slipped to 1.0838 Swiss francs from 1.0890 late Wednesday.

The pound fell to 1.5943 dollars from 1.5984. - AFP /ls

From ChannelNewsAsia.com; see the source article here.

Related articles by Zemanta

• Europe's moment of truth (guardian.co.uk)
• Greece extends ban on genetically modified corn (cbc.ca)
• Europe Looks to Tighten Banking Supervision (nytimes.com)
• European Union Looks to Tighten Banking Supervision (nytimes.com)