Friday May 16, 2008 - 11:44:31 GMT
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Reuters - www.reuters.com
FOREX NEWS-Contrasting data gives euro upper hand vs dlr
(Changes byline, updates prices, adds quotes)
By Veronica Brown
LONDON, May 16 (Reuters) - The dollar drifted down versus
the euro on Friday, pressured by the contrast between Thursday's
weak U.S. jobs and manufacturing data and forecast-beating
growth figures from the euro zone.
The U.S. data injected a hint of doubt into market
expectations that the Federal Reserve's aggressive cycle of
interest rate cuts is over.
Further clues on the depth of the U.S. economic slowdown
will come on Friday from April housing starts and building
permits numbers at 1230 GMT and the May Reuters/University of
Michigan consumer sentiment index at 1355 GMT. All three
measures are seen weaker.
By contrast, Thursday's strong first-quarter growth figures
from Germany and France boosted the euro as they highlighted the
relative strength of the European economy compared with the
The dollar also slipped versus the yen after Japanese data
showed growth of 0.8 percent in the first three months of this
year, above market expectations for a 0.6 percent increase
Credit Suisse currency strategist Adam Myers said that while
there were rising expectations that Europe's economy would
slow, the problems in the U.S. were far from over.
"I'm very much in the camp where I think the dollar will
probably weaken further from here. Europe is not going to be
anywhere as badly affected with a continuing slowdown in the
real economy as the U.S. is," he said.
"Europe will slow down but its slowdown is not going to have
the same impact on financial markets and lending and therefore
consumers than it will in the U.S."
By 1032 GMT the euro was 0.1 percent higher at $1.5470
<EUR=>. Against the yen the euro rose to 162.04 yen <EURJPY=>.
The dollar was flat at 104.75 yen, having earlier fallen to
MORE BAD NEWS?
The dollar index, which tracks the greenback's performance
against a basket of major currencies was a touch weaker at
73.298, trimming earlier losses .DXY.
The index hit a two-month high of 73.895 last week thanks to
steady gains in U.S. stocks, rising U.S. bond yields and a
growing view that the worst of the credit crisis may be over.
However, the improved confidence in the U.S. economy has
taken a slight knock this week with a smaller than expected rise
in U.S. consumer prices.
Data on Thursday showed the number of workers claiming
unemployment benefit hit a four-year high while factory activity
was weak in the U.S. mid-Atlantic and in New York state
"(Friday's) U.S. economic news is unlikely to offer much
better news; April housing starts and building permits are set
to remain weak whilst Michigan confidence will fall further
despite already dropping to multi-year lows," Calyon said in a
"The market interest to re-establish positions in EUR/USD
remains limited at present. Nonetheless, weaker data today could
see euro push back towards the top of the range towards $1.56."
Elsewhere, Iceland's central bank struck a deal with its
counterparts in Sweden, Norway and Denmark allowing it to buy
euros with Icelandic crowns, giving the island's beleaguered
currency a strong boost [ID:nL16579130].
The crown surged 4.5 percent against the euro <EURISK=>.
Analysts said the bank was thought to be talking to other
central banks about possible further measures.
(Reporting by Veronica Brown; Editing by Ian Jones)
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