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Euro goes steady vs. dollar

05 August 2009 08:05 (UTC +04:00)

Baku -APA-Economics. The euro steadied against the dollar Tuesday as investors took a breather and banked profits from the preceding day’s eight-month rally on growing hopes for recovery.
At 2100 GMT, the European single currency was at 1.4410 dollars, compared with 1.4411 dollars late Monday in New York.
The dollar also was nearly unchanged against the Japanese currency, fetching 95.24 yen after 95.23 yen late Monday.
"We had a big sell-off in the dollar" in recent days, said David Solin of Foreign Exchange Analytics, and "people look hesitant to take any big additional positions."
The euro had surged from 1.40 dollars Friday to above 1.44 dollars Monday, climbing to its highest level since December at 1.4445 dollars amid growing hopes for recovery from the global recession.
The euro is seen as a higher-risk investment than the dollar and tends to strengthen in times of increasing confidence.
Increasing risk appetite has "dented the dollar’s safe-haven appeal," said analyst James Hughes of CMC Markets.
"Continued talk of economic recovery and the plethora of better than expected economic readings are showing that at worst we are nearing the bottom of this recession."
Commenting on the euro’s choppy trade, traders suggested it had been over-bought on Monday and the market was looking ahead to key US economic reports this week, including the closely watched monthly jobs data due on Friday.
"Prospects for the dollar point to continued downside," Citi analysts said in a note to clients.
"Recovering risk appetite, a muted yield response, potential upside surprises from employment data later this week and supportive technical conditions suggest further depreciation," they said.
Audrey Childe-Freeman, a strategist at Brown Brothers Harriman, also forecast ongoing pressure for the dollar.
"Although it is a slightly firmer tone, the shallowness of the bounce suggests that the bears are simply taking a breather and not necessarily prepared to reverse themselves," she said.
The euro traded lower for much of the session after data showed eurozone producer prices plunged 6.6 percent in June from a year ago, a record annual drop that encouraged traders to book profits from Monday’s gains.
But the euro picked up after a report showed US pending home sales rose in June for the fifth month running.
In late New York trading, the dollar rose to 1.0594 Swiss francs from 1.0588 Monday.
The pound was at 1.6945 dollars, up from 1.6933. Source: AFP