Further Euro Gains Likely as Central Banks Stay Loose
The euro and other higher-yielding currencies are positioned to continue to gain against the dollar this week, even as flagging U.S. jobs data cast doubt on the global economic recovery.
Investors need somewhere to put the cheap money sloshing around their portfolios, courtesy of the ultraloose policies recommitted to last week by the U.S. Federal Reserve and other central banks.
As long as investors remain assured central bankers will keep the cheap money flowing, money will continue to funnel into risk-positive trades, including high-yielding currencies and stocks, analysts said.
"None of the Group of Three central banks is rushing to withdraw liquidity," Steven Englander, chief U.S. currency strategist at Barclays Capital in New York, said of the U.S., euro-zone and Japanese central banks. "Through the rest of the year, markets are going to take comfort in that," sending risk-positive assets higher.
In a report to finance ministers and central-bank governors from the Group of 20 leading economies, the International Monetary Fund said there are indications the U.S. dollar is being used as a funding currency for "carry trades," a strategy in which investors borrow in currencies that are expected to have low interest rates over the medium term to buy currencies that are expected to have higher interest rates.
"These trades may be contributing to upward pressure on the euro and some emerging economy currencies," the IMF said. "The euro has experienced most appreciation among major advanced economy currencies and remains on the strong side of its equilibrium."
But G-20 officials gave no indication that they would take action that would force investors to rethink their carry trades. Their final statement made no mention of currencies, and discussion on foreign-exchange issues on the sidelines of their meeting in St. Andrews, Scotland, appears to have been limited.
The IMF added to pressure on the Chinese government to allow the yuan to appreciate by describing the currency as "significantly undervalued."
But U.S. Treasury Secretary Timothy Geithner said tensions with China over exchange-rate policy aren't escalating, while Chinese officials repeated their call for a stable U.S. dollar.
Friday in New York, the euro was at $1.4847, down from $1.4877 late Thursday. The dollar was at 89.96 yen, down from 90.77, while the euro was at 133.56 yen from 135.04. The U.K. pound was at $1.6610, up from $1.6587. The dollar was at 1.0173 Swiss francs from 1.0162 francs.
/online.ws

NEW YORK, April 8 (Reuters) - The euro extended gains versus the dollar to hit sessions highs above $1.33 on Wednesday.
The euro rose as high as $1.3303, according to Reuters data, and was last up 0.1 percent at $1.3280

Euro Zone Producer Prices Fall at Speeds Unseen Since 1999

(CEP News) Frankfurt - Euro zone producer prices surprised to the downside in February, adding to mounting evidence that inflationary pressures are easing in the monetary union.

Eurostat reported that euro zone producer price fell 1.8% in the 12 months to February, outdoing both the 1.5% decline expected and January's 0.7% contraction. Meanwhile, January's figure was revised down from an initial estimate of -0.5%. February's annualized fall is the most pronounced recorded since April 1999.

US dollar mostly lower in European trading, 1st Ld-Writethru, EU

LONDON (AP) — LONDON (AP) — The U.S. dollar was mostly lower against other major currencies in late European trading Friday. Gold rose.

The euro traded at US$1.3416, down from US$1.3446 late Thursday in New York.

Other dollar rates:

—99.61 Japanese yen, down from 99.64

—1.1344 Swiss francs, down from 1.1368

—1.2394 Canadian dollars, down from 1.2406

The British pound was quoted at US$1.4793, up from $1.4712.

Gold traded in London at US$905.00 per troy ounce, up from US$897.75 late Thursday.

Euro Shares Dip Ahead of US Jobs Data

cnbc.com
European shares got off to a weak start on Friday as investors took a breather after pushing stocks up 10 percent over the past three days and looked to U.S. payroll data for signs of any recovery in the economy.
The FTSEurofirst 300 index of top European shares was down 0.8 at 774.92 points, led lower by falls in bank stocks.

Euro Holds Gains Following Smaller-Than-Expected ECB Cut

(CEP News) - A smaller-than-expected ECB interest rate cut on Thursday morning has helped the euro move higher, but currency strategists are mixed as to whether the currency will see further gains in the short term.
EUR/USD shot to session highs at 1.3493 USD following the interest rate decision and just ahead of ECB President Jean-Claude Trichet's monthly press conference. However, the gains were relatively short-lived, as markets dragged the cross back below 1.34 USD.

Euro Gains Despite European Central Bank (ECB) Rate Cut - Why?

The euro ended Thursday on a mixed note, as the currency surged against the Japanese yen, US dollar, and Swiss franc but slipped against the ultra strong commodity dollars.

The moves came after the European Central Bank (ECB) cut rates by 25 basis points to 1.25 percent, which served as a positive surprise since a Bloomberg News poll had listed a forecast for a 50 basis point reduction. However, given the content of ECB President Jean-Claude Trichet’s post-meeting press conference, there is some bearish potential for the euro he not only left the door open to further rate cuts, but also hinted that quantitative easing may be discussed during their next meeting.