Tuesday November 24, 2009 - 11:19:46 GMT
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Reuters - www.reuters.com
FOREX NEWS-Euro down but pares losses on German Ifo
* Euro down 0.2 pct at $1.4930 EUR=
* German Ifo rises; German Q3 GDP unchanged
* Risk-taking eases on bank sector concerns
* Upside for euro/dollar heavy above $1.5000
By Tamawa Desai
LONDON, Nov 24 (Reuters) - The euro fell against the dollar
on Tuesday on banking sector concerns but pared losses as a key
measure of German business sentiment beat forecasts, triggering
optimism the euro zone's biggest economy was recovering.
The German Ifo institute's business climate index rose to
93.9 in November from an upwardly revised 92.0 in October, and
beat forecasts of 92.5. The current conditions index rose to
89.1 from 87.4 the previous month, and beat expectations of
Separate data showed Germany's economy grew 0.7 percent in
the third quarter, unchanged from a preliminary estimate.
"The economic recovery is continuing and we expect growth to
maintain its high momentum in the fourth quarter," said Ralf
Umlauf, economist at Helaba.
"Despite the improvement, the Ifo Index is still at a
moderate level, historically. We therefore do not infer that
there will be pressure on the European Central Bank to herald a
change in interest rate policy in the immediate future."
Earlier, the euro was hurt on a German media report the
majority owners of WestLB [WDLG.UL] were threatening not to
support the stricken German landesbank's requirement for more
capital, citing financial sources. [ID:nGEE5AN07U]
Worries about the global banking system, including a report
published on Monday by U.S. ratings firm Standard and Poor's
which raised concerns about the health of some major banks
[ID:nGEE5AM11I], prompted investors to pare back on riskier
"Rallies on risk assets are showing diminishing returns, and
major currencies are looking stretched against the dollar," said
Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi UFJ.
European shares were down 0.7 percent while the bank
sub-sector of the DJ Stoxx 600 fell 1.6 percent.
By 0943 GMT, the euro was down 0.2 percent on the day at
$1.4930, after falling as low as $1.4889. It hit a one-week high
of $1.5001 on Monday.
Traders cited options with a strike price of $1.5000 and
$1.5050 set to expire later in the day.
The dollar index, which tracks the performance of the
greenback against a basket of six other major currencies, was up
0.2 percent at 75.257 .DXY.
Some investors buy the dollar, seen as a safe haven, against
other higher-yielding currencies and sell assets like stocks and
commodities when economic optimism diminishes.
The yen was also broadly firmer, with the dollar down 0.3
percent to 88.63 yen JPY=, having earlier touched a six-week
low of 88.56 yen on trading platform EBS.
The euro fell 0.6 percent to 132.30 yen EURJPY=.
Traders will focus on U.S. economic indicators later in the
day, including revised U.S. gross domestic product for the third
quarter and housing market data. ECONUS
The U.S. Federal Reserve will release minutes of its Nov.
3-4 meeting, and markets will look for any hints on when and how
the Fed will draw down extraordinary economic support measures.
The minutes also include economic projections and the market
will pay special attention to unemployment.
Commodity-linked currencies also weakened. The Australian
dollar was down 0.7 percent at $0.9171 AUD=D4, off a 15-month
high of $0.9407 last week. The New Zealand dollar NZD=D4 fell
1.0 percent to $0.7253, having risen more than 1 percent on
(Editing by Nigel Stephenson)
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