Euro pauses close to record high against dollar

04/26 11:06:37 AM

TOKYO (AFP) - The euro hovered just shy of its record high against the dollar in Asian trade Thursday as players held their breath ahead of a raft of US and Japanese economic data, dealers said.

They said the euro was taking a breather after coming within a whisker of its all-time best against the dollar on optimism about growth prospects for the 13-nation eurozone and expectations of further interest rate rises there.

The single European currency was at 1.3647 dollars in Tokyo morning trade, up slightly from 1.3636 late Wednesday in New York.

At one point Wednesday the euro scaled a more than two-year peak of 1.3665 dollars, almost touching its December 30, 2004 record high of 1.3666.

"The market is taking a breather after the euro shot to that high level but there is really no reason to sell down the euro, either," said Shigeru Nakane, a dealer at Resona Bank.

The dollar failed to gain traction overnight from data showing a strong 3.4 percent monthly gain in durable goods orders, or a 2.6 percent rebound in new home sales that eased worries about the US housing sector.

The dollar slipped to 118.62 yen in Tokyo after 118.72 in New York while the euro eased to 161.80 yen from 161.92.

The market was bracing for a series of economic reports on Friday including Japanese unemployment, consumer prices and industrial output, as well as the Bank of Japan's economic outlook report.

In the United States, key US gross domestic product figures for the first quarter are also due Friday.

"Friday's US GDP report for the first quarter where GDP growth is expected to have slowed to 1.8 percent from 2.5 percent will be key to whether the dollar continues to trend lower in the short-term," National Australia Bank currency strategist John Kyriakopoulos wrote in a note to clients.

Players have driven the euro higher on growing expectations of further interest rate rises by the European Central Bank, with many economists forecasting a quarter point hike to 4.00 percent in June.

That would make eurozone assets even more attractive, enticing investors to change other currencies into the euro.

The single European currency was given a fresh boost Wednesday after the Ifo research institute's closely watched German business confidence index rose to 108.6 points in April from 107.7 points in March.

 

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