BLBG:Euro Rises From Seven-Week Low as German Data, Stock Gains Fuel Optimism
The euro strengthened from a seven- week low against the dollar as German reports showed business confidence improved and economic growth accelerated even with Europe’s worsening debt crisis.
The 17-nation currency gained versus the yen as European stocks rallied, spurring demand for the region’s assets. The yen weakened against most major counterparts after Standard & Poor’s said Japan’s lack of progress in tackling its public debt burden put it at risk of a credit-rating downgrade. Australia’s dollar advanced on speculation investors are buying the currency to diversify their assets.
“Risk appetite is looking a bit better,” said Jeremy Stretch, executive director of currency strategy at Canadian Imperial Bank of Commerce in London. “If we see a small improvement in risk or modest rebound in the euro, I wouldn’t necessarily want to run too hard with that.”
The euro appreciated 0.4 percent to $1.3392 at 9:47 a.m. London time, after slipping to $1.3320 yesterday, the lowest level since Oct. 6. The currency rose 0.2 percent to 103.34 yen. The yen climbed 0.2 percent to 77.13 per dollar, trimming an earlier gain of as much as 0.4 percent.
The Munich-based Ifo institute said its business climate index (SXXP) increased to 106.6 this month from 106.4 in October. Economists expected a decline to 105.2, according to a Bloomberg News survey. Gross domestic product advanced 0.5 percent last quarter, the Federal Statistics Office said, confirming an initial estimate published on Nov. 15. That was an acceleration from 0.3 percent growth in the previous three months.
Stocks Gain
The Stoxx Europe 600 Index gained 1.3 percent, snapping a five-day decline.
Europe’s shared currency tumbled 1.2 percent against the dollar yesterday after Germany received insufficient bids at a bond auction, fueling concern that Europe’s sovereign-debt crisis is driving away investors from the region’s assets.
Swings in currency markets may be exaggerated today because of lower than usual volumes during the U.S. Thanksgiving national holiday, Stretch said.
The yen dropped against 11 of its 16 major counterparts after S&P said Japanese Prime Minister Yoshihiko Noda’s administration hasn’t made progress in tackling the public debt burden, an indication it may be preparing to lower the nation’s sovereign grade.
‘Getting Worse’
“Japan’s finances are getting worse and worse every day, every second,” Takahira Ogawa, Singapore-based director of sovereign ratings at S&P, said in an interview. It “may be right in saying that we’re closer to a downgrade.”
The Australian dollar rose for the first time in four days on speculation investors are buying the currency in a bid to diversify their holdings amid Europe’s fiscal crisis.
“You are seeing a very, very modest bounce in some of the higher-yielding currencies,” said Callum Henderson, global head of foreign-exchange research in Singapore at Standard Chartered Plc. “The Australian dollar, like other commodity currencies, continues to benefit to some degree from reserve diversification.”
Australia’s currency gained 1 percent to 97.80 U.S. cents after dropping to 96.64 cents yesterday, the weakest since Oct. 6. The so-called Aussie climbed 0.7 percent to 75.45 yen.
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To contact the reporters on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net
