By William L. Watts and Michael Kitchen, MarketWatch
FRANKFURT (MarketWatch) — Stronger-than-expected economic data in Asia and Europe provided a further lift to equity markets Tuesday, keeping the dollar under pressure as investors shunned safe-haven assets.
The dollar index DXY -0.57% , which tracks the greenback against six rival currencies, fell 0.6% to 79.731, according to FactSet data.
The euro EURUSD +0.73% traded at $1.3041, up from $1.2931 in late Monday trade in North America.
The shared currency extended a gain versus the dollar after Germany’s federal labor agency reported that seasonally-adjusted jobless numbers posted a larger-than-expected decline of 22,000 in December, while the adjusted jobless rate fell to 6.8% from 6.9%.
“A better tone for risk is a partial explanation, though with dollar/yen also falling to a five- week low, this is clearly not the whole story,” said Adam Cole, global head of foreign exchange at RBC Capital in London, in emailed comments. “With several major markets still closed (Japan and China notably), and liquidity reported to be extremely poor, however, it would be unwise to read too much into today’s price action.”
U.S. stock index futures pointed to a higher opening for Wall Street. Read more about U.S. stock index futures.
European equities were higher, with London traders returning after a Monday bank holiday. Other European markets posted strong gains on Monday. Read Europe Markets.
Asian stocks also gained, with Hong Kong’s Hang Seng Index HK:HSI +2.40% rising 2.4%. Read more on Asian stock moves.
Analysts cautioned that euro gains could prove fragile as investors eye a slew of upcoming bond auctions by euro-zone sovereigns as European leaders continue to struggle toward a solution as the region’s debt crisis enters its third year.
“With an ECB [European Central Bank] rate decision meeting next week, various meetings between European officials and another EU summit at the end of the month, plus a large bond issuance schedule from the euro area, there’s clearly plenty of event risk in January,” wrote strategists at Lloyds Bank.
The Japanese yen USDJPY -0.27% edged higher, with the dollar falling to ÂĄ76.67 from ÂĄ76.90 late Monday. As Cole noted, the safe-haven yen typically falls when risk appetite is on the rise.
The key data event of the week arrives on Friday with the release of U.S. nonfarm payrolls and other labor market figures for December. On Tuesday, investors will pay close heed to the Institute for Supply Management’s manufacturing index for December, which is expected to rise slightly to 53.1%. Read Economic Preview.
The British pound GBPUSD +0.58% rose to $1.5611 from $1.5507. The purchasing managers index for Britain’s manufacturing sector rose to 49.6 from a revised 47.7 in November. Economists had forecast a reading of 47.3. The data indicates the sector continued to contract in December, but at a slower pace. A reading of less than 50 indicates a decline in activity, while a figure of more than 50 signals growth. Read Market Pulse on U.K. manufacturing PMI.
The Australian dollar AUDUSD +1.08% climbed to $1.0364 from $1.0228.
William L. Watts is a reporter for MarketWatch in Frankfurt.
Michael Kitchen is Asia editor for MarketWatch and is based in Los Angeles.
