Euro Recovers From 22-Month Low
LONDON—Choppy trading in the euro prevailed during the European session Thursday as the currency tumbled to a 22-month low against the dollar before reversing course to regain almost all its losses for the day.
The jittery start to European trading after a lackluster European summit intensified with the publication of dismal German survey data. The euro fell below $1.2516 against the dollar, its lowest point since July 6, 2010, and to ¥99.37 against the yen, its weakest since Feb. 2.
The German Ifo business climate Index for May fell to 106.9, below the 109.5 expected by economists. The Ifo Institute warned that the uncertainty in the euro zone was finally affecting the German economy. Initial estimates showed Germany's private sector contracted in May for the first time in six months.
For the euro zone as a whole, activity in manufacturing and services was also worse than expected, according to the flash purchasing managers' indexes.
"The trend is for a weaker euro [against the dollar]. The euro is just grinding lower in line with the data," said Paul Robson, senior currency strategist at Royal Bank of Scotland. He has a short-term target of $1.22-$1.23 for the single currency.
But euro-buying interest emerged just above $1.25 as traders sought to lock in profits, having seen the single currency slide sharply from this week's high above $1.28 on Monday, amid growing worries about a possible Greek exit from the euro zone. That helped the euro recover to around $1.2580.
"The overriding fear at the moment would be holding positions over the weekend, any weekend...You don't want to be caught holding positions and be left not knowing your counter-party risk or what kind of currency you might have Monday," said Mark Hewlett, partner at Anello Asset Management.
The pound fell to $1.5640 against the dollar on EBS—its lowest since March 15—but also steadied as traders shrugged off weak economic growth numbers and tracked moves in the euro against the dollar. Revised official data showed the U.K. economy shrank 0.3% between January and March, down from the 0.2% contraction initially estimated.
In emerging markets, the Indian rupee extended its record low, with the dollar hitting 56.38 rupees. Meanwhile, the Polish zloty steadied on word from the finance ministry that it would exchange around €11 billion in European Union funds in 2012, according to Bank Zachodni WBK.
The South African Reserve Bank is due to announce a decision on interest rates at around 1 p.m. GMT but no change from 5.5% is expected.
In recent trade, the euro was at $1.2580 against the dollar, compared with $1.2582 late Wednesday in New York, according to trading system EBS. The dollar was at ¥79.39 against the yen, compared with ¥79.47, while the euro was at ¥99.86 compared with ¥100.01. Meanwhile, the pound was trading at $1.5694 against the dollar, compared with $1.5693 late Wednesday in New York.
The ICE Dollar Index, which tracks the greenback against a basket of currencies, was at 82.055 compared with 82.047 late Wednesday in New York.
Euro Recovers From 22-Month Low - WSJ.com
LONDON—Choppy trading in the euro prevailed during the European session Thursday as the currency tumbled to a 22-month low against the dollar before reversing course to regain almost all its losses for the day.
The jittery start to European trading after a lackluster European summit intensified with the publication of dismal German survey data. The euro fell below $1.2516 against the dollar, its lowest point since July 6, 2010, and to ¥99.37 against the yen, its weakest since Feb. 2.
The German Ifo business climate Index for May fell to 106.9, below the 109.5 expected by economists. The Ifo Institute warned that the uncertainty in the euro zone was finally affecting the German economy. Initial estimates showed Germany's private sector contracted in May for the first time in six months.
For the euro zone as a whole, activity in manufacturing and services was also worse than expected, according to the flash purchasing managers' indexes.
"The trend is for a weaker euro [against the dollar]. The euro is just grinding lower in line with the data," said Paul Robson, senior currency strategist at Royal Bank of Scotland. He has a short-term target of $1.22-$1.23 for the single currency.
But euro-buying interest emerged just above $1.25 as traders sought to lock in profits, having seen the single currency slide sharply from this week's high above $1.28 on Monday, amid growing worries about a possible Greek exit from the euro zone. That helped the euro recover to around $1.2580.
"The overriding fear at the moment would be holding positions over the weekend, any weekend...You don't want to be caught holding positions and be left not knowing your counter-party risk or what kind of currency you might have Monday," said Mark Hewlett, partner at Anello Asset Management.
The pound fell to $1.5640 against the dollar on EBS—its lowest since March 15—but also steadied as traders shrugged off weak economic growth numbers and tracked moves in the euro against the dollar. Revised official data showed the U.K. economy shrank 0.3% between January and March, down from the 0.2% contraction initially estimated.
In emerging markets, the Indian rupee extended its record low, with the dollar hitting 56.38 rupees. Meanwhile, the Polish zloty steadied on word from the finance ministry that it would exchange around €11 billion in European Union funds in 2012, according to Bank Zachodni WBK.
The South African Reserve Bank is due to announce a decision on interest rates at around 1 p.m. GMT but no change from 5.5% is expected.
In recent trade, the euro was at $1.2580 against the dollar, compared with $1.2582 late Wednesday in New York, according to trading system EBS. The dollar was at ¥79.39 against the yen, compared with ¥79.47, while the euro was at ¥99.86 compared with ¥100.01. Meanwhile, the pound was trading at $1.5694 against the dollar, compared with $1.5693 late Wednesday in New York.
The ICE Dollar Index, which tracks the greenback against a basket of currencies, was at 82.055 compared with 82.047 late Wednesday in New York.
Euro Recovers From 22-Month Low - WSJ.com