NEW YORK, Jan 30 (Reuters) - The dollar rose against the euro on Friday, on track for its best month since October, as evidence of a prolonged slump on both sides of the Atlantic added to the greenback's appeal as a safe haven for investors.
The euro shed more than 1 percent against the dollar and tumbled against the yen after euro-zone employment and inflation data underscored the spreading economic malaise.
Another report showed the U.S. economy shrank 3.8 percent in the last three months of 2008, its fastest pace in nearly 27 years. But because that was not as bleak as the 5.4 percent contraction markets had expected, the dollar got a boost.
Though economists expect the U.S. downturn to accelerate in the first half of 2009, currency strategists said that would simply weaken global growth further, adding to the appeal of the dollar and Japanese yen over other major currencies.
"The dollar has been displaying resilience to bad economic numbers," said Vassili Serebriakov, senior currency strategist at Wells Fargo in New York. "There's some question about whether continued accumulation of very weak data will weaken this resilience, but for now, I think it suggests risk-aversion is still driving the currency market."
The euro was changing hands at $1.2804 <EUR=>, down 1.2 percent on the day and 8.4 percent in January, its worst monthly slide since October. It shed 1.4 percent to 114.99 yen <EURJPY=>. The dollar fell 0.2 percent to 89.75 yen <JPY=>.
The Japanese currency benefits as investors sell riskier assets and currencies that were financed with cheaply-borrowed yen, while the dollar rises as money is repatriated into safe-haven U.S. assets such as Treasuries.
Mansoor Mohi-uddin, currency strategist at UBS in Zurich, said U.S. investors have "substantial scope for further repatriation" in coming quarters if risk aversion stays high.
"Of course, U.S. investors can't repatriate assets forever, but for now, the share of their portfolios held in foreign markets remains well above historical levels," he said.
Moody's Investor Service's decision to downgrade its outlook on Ireland's long-term debt also dented the euro. The Standard & Poor's rating agency earlier this month cut the credit ratings of Spain, Portugal and Greece.
Michael Woolfolk, senior currency strategist at The Bank of New York-Mellon, said the euro's slide through technical resistance at $1.28 may set up a move toward $1.25 next week.
Sterling rose 1.3 percent to $1.4480 <GBP=>, lifted by better-than-expected mortgage data, though analysts said it could struggle next week ahead of a Bank of England meeting likely to result in a 50 basis point rate cut to 1 percent.
The dollar rose 0.6 percent to 1.1599 Swiss francs <CHF=> after Swiss President and Finance Minister Hans-Rudolf Merz was quoted by Market News as saying he would back the central bank if it wanted to sell the franc.
Last week, SNB Vice Chairman Philipp Hildebrand said the bank stood ready to engage in unlimited currency intervention to weaken the franc and fend off deflation.
(Additional reporting by Gertrude Chavez-Dreyfuss; Editing by Chizu Nomiyama)
Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.
Forex Trading News
Daily Forex Market News Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Forex News Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."
Elevate Your Trading With The Amazing Trader!
The Amazing Trader includes:
Actionable trading levels delivered to YOUR charts in real-time.
looking for your first broker or do you need of a new one? There are
more critical things to consider than you might have thought.
We were trading long before there were online brokers. Global-View
has been directly involved with the industry since its infancy. We've
seen everything and are up-to-data with recent regulatory changes.
The Global-View Forex Forum is the hub for currency trading on the web. Founded in 1996, it was the original forex forum and is still the place where forex traders around the globe come 24/7 looking for currency trading ideas, breaking forex news, fx trading rumors, fx flows and more. This is where you can find a full suite of forex trading tools, including a complete fx database, forex chart points, live currency rates, and live fx charts. In addition, there is a forex brokers directory where you can compare forex brokers. There is also a forex brokers hotline where you can ask for help choosing a forex broker that meets your individual fx trading needs. Interact on the same venue to discuss forex trading.
The forex forum is where traders come to discuss the forex market. It is one of the few places where forex traders of all levels of experience, from novice to professionals, interact on the same venue to discuss forex trading. There is also the GVI Forex, which is a private subscription service where professional and experienced currency traders meet in a private forex forum. it is like a virtual forex trading room. This is open to forex traders of all levels of experience to view but only experienced currency tradingprofessionals can post.
Currency trading charts are updated daily using the forex trading ranges posted in the Global-View forex database. You will also find technical indicators on the fx trading charts, e.g. moving averages for currencies such as the EURUSD. This is another forex trading tool provided by Global-View.com.
The forex database can be used to access high, low, close daily forex ranges for key currency pairs, such as the EURUSD, USDJPY, USDCHF, GBPUSD, USDCAD, AUD, NZD and major crosses, including EURJPY, EURGBP, EURCHF, GBPJPY, GBPCHF and CHFJPY. Data for these currency trading pairs dating back to January 1, 1999 can be downloaded to an Excel spreadsheet.
Forex chart points are in a currency trading table that includes; latest fx tradinghigh-low-close range, Bollinger Bands, Fibonacci retracement levels, daily forex pivot points support and resistance levels, average daily forex range, MACD for the different currency trading pairs. You can look on the forex forum for updates when one of the fx trading tools is updated.
Global-View also offers a full fx trading chart gallery that includes fx pairs, such as the EURUSD, commodities, stocks and bonds. In a fx trading world where markets are integrated, the chart gallery is a valuable trading tool. Look for updates on the Forex Forum when the chart gallery is updated.
Global-View.com also offers a forex blog, where articles of interest for currency trading are posted throughout the day. The forex blog articles come from outside sources, including forex brokers research as well as from the professionals at Global-View.com. This forex blog includes the Daily Forex View, Market Chatter and technical forex blog updates. In additional to its real time forex forum, there are also Member Forums available for more in depth forex trading discussions.
WARNING: FOREIGN EXCHANGE TRADING AND INVESTMENT IN DERIVATIVES
CAN BE VERY SPECULATIVE AND MAY RESULT IN LOSSES AS WELL AS PROFITS. FOREIGN
EXCHANGE AND DERIVATIVES TRADING IS NOT SUITABLE FOR MANY MEMBERS OF THE
PUBLIC AND ONLY RISK CAPITAL SHOULD BE APPLIED. THE WEBSITE DOES NOT TAKE
INTO ACCOUNT SPECIAL INVESTMENT GOALS, THE FINANCIAL SITUATION OR SPECIFIC
REQUIREMENTS OF INDIVIDUAL USERS. YOU SHOULD CAREFULLY CONSIDER YOUR FINANCIAL
SITUATION AND CONSULT YOUR FINANCIAL ADVISORS AS TO THE SUITABILITY TO YOUR
SITUATION PRIOR TO MAKING ANY INVESTMENT OR ENTERING INTO ANY TRANSACTIONS.