Euro steady ahead of European PMI data

IMF says it expects global growth of 3.5% in 2013, down from its previous estimate of 3.6%
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First Published: Thu, Jan 24 2013. 11 47 AM IST
The analyst highlighted that some euro zone nations have been able to go back to the financial markets, as shown by strong demand for bond issues by Spain and Portugal. Photo: AFP
The analyst highlighted that some euro zone nations have been able to go back to the financial markets, as shown by strong demand for bond issues by Spain and Portugal. Photo: AFP
New York: The euro held steady against the dollar on Wednesday ahead of key euro zone economic data as investors remained buoyed by a positive German sentiment survey this week.
The euro bought $1.3315 around 03:30 pm, slipping slightly from $1.3321 at the same time on Tuesday.
Kathy Lien at BK Asset Management said traders awaited PMI numbers for the month of January scheduled for release on Thursday.
“They tend to provide the most up-to-date look at how the economy is performing. Based on the ZEW survey, investors are very optimistic about the outlook for Europe but the International Monetary Fund clearly doesn’t share this view,” Lien said.
The International Monetary Fund (IMF) cut its global growth forecasts slightly on Wednesday, predicting for the first time that the euro zone, mired in a public debt crisis, would spend a second year in recession in 2013.
The IMF says that it expects global growth of 3.5% in 2013, down from its previous estimate of 3.6%.
The IMF also projects a slight economic contraction in 2013 for the 17 countries that use the euro.
“That weighed on the euro,” said Charles St-Arnaud, an analyst at Nomura. “But investors expected that and the euro then rebounded.”
The analyst highlighted that some euro zone nations have been able to go back to the financial markets, as shown by strong demand for bond issues by Spain and Portugal.
The euro has been trading in a narrow range for several days around $1.3330 in a market mainly focused on profit taking, traders said.
Overall, the markets struggled to find direction on Wednesday, said Anita Paluch, an analyst at Gekko Markets.
The yen continued to strengthen after the Bank of Japan’s announcement on Tuesday of stimulus to boost the lackluster economy.
The dollar ticked down to ¥88.56 from ¥88.68 late Tuesday, while the euro dipped to ¥118.00 from ¥118.14.
After the US House of Representatives voted to temporarily suspend the nation’s debt ceiling “the performance of the dollar was mixed,” Lien said.
“The successful passage of a debt limit extension was a given considering that the bill was drafted by House Republicans—to reject the bill would have been a complete embarrassment for the party.”
The dollar rose against the Swiss currency, to 0.9292 francs from 0.9285 francs late Tuesday.
The pound rose to $1.5840 from $1.5836.
AP contributed to this story.
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First Published: Thu, Jan 24 2013. 11 47 AM IST
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