Thursday April 9, 2009 - 11:27:57 GMT
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Reuters - www.reuters.com
FOREX-Euro slightly higher as stocks inch up
* Euro up, dlr, yen edge lower as European stocks inch up
* Euro up 0.2 percent at $1.3285, up 0.6 pct vs yen
* ECB's Nowotny: Rates under 1 pct under discussion
* BoE keeps interest rates unchanged, continue QE
(Adds quotes, updates prices)
By Naomi Tajitsu
LONDON, April 9 (Reuters) - The dollar and yen slipped
against other major currencies on Thursday as European shares
eked gains, renewing appetite for so-called riskier assets ahead
of the Easter holidays.
The euro was supported by a 0.3 percent rise in regional
share prices .FTEU3, although the currency retreated from a
session high after a European Central Bank Governing Council
member said that a fall below 1 percent in the central bank's
key rate was "open for discussion" [ID:nVIE001382]
Sterling was little changed on the day, after the Bank of
England held interest rates at a record low 0.5 percent, as
widely expected, and said it would continue with quantitative
"To the extent that we've seen a slight revival in risk
appetite, the rebound in equities is important," said Robert
Minikin, senior forex strategist at Standard Chartered in
"But we stress that for many currencies, for example in
dollar/yen, it's been a mean-reverting move, rather than pushing
out to new levels."
He added that the pair was hovering near short-term moving
Volatile stock markets and uncertainty over banks kept
investors jittery, and activity was also limited ahead of
holidays in many markets on Friday and Monday.
Currency markets have recently taken their cue from equities
as big U.S. firms kicked off first quarter earnings, with the
focus on financial firms' results due out next week.
European Central Bank President Jean-Claude Trichet said on
Thursday he welcomed U.S. authorities saying a strong dollar was
in U.S. interests and that it was important for all partners to
be responsible on exchange rates [ID:nWEA6618].
Data on Thursday showed German industrial production fell by
a monthly 2.9 percent in February, its sixth straight
month-on-month drop. Still, the figure was slightly better than
forecasts for a fall of 3.1 percent [ID:nL9534390]
The country's consumer price index rose by 0.5 percent in
March from the same period a year ago, confirming earlier
POLICY IN FOCUS
By 1043 GMT, the euro was up 0.2 percent at $1.3285, having
climbed as high as $1.3335 in early trade.
Against the yen, the euro was up 0.6 percent at 133.00 yen.
European shares pared some early gains, but demand for risk
remained intact for the moment, as U.S. stock futures were up in
early London trade, with S&P futures up 0.8 percent.
"With the earnings season yet to enter full swing, the
market is still willing to give risk appetite the benefit of the
doubt," said Geoffrey Yu, currency strategist at UBS.
The dollar rose 0.4 percent to 100.10 yen after falling
about 0.8 percent on Wednesday. It rose as high as 101.45 yen on
Monday to strike a six-month peak.
Sterling <GBP=> traded at $1.4675, down a touch from the
Nowotny, who is also governor of the Switzerland's central
bank, said in an interview with Bloomberg News that he saw he
possibility of taking the ECB rate below 1 percent, after the
central bank cut rates to 1.25 percent last week.
He added that purchasing corporate bonds and commercial
paper was a "sensible and efficient measure". [ID:nVIE001382]
Lower ECB rates would further diminish what remains of the
euro's yield advantage against currencies like the dollar and
the yen, which helped to knock the currency from the day's high
Market participants are awaiting the results of tests to see
how the largest U.S. banks would fare under more
adverse-than-expected economic conditions, which are seen coming
out later in the month.
Reuters sources say the U.S. Treasury is planning to delay
the release of any completed bank stress test results until
after first-quarter earnings season, in order to avoid
complicating the stock market's reaction [ID:nN07471183].
(Additional reporting by Tamawa Desai, editing by Andy Bruce)
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