Euro slips against dollar on profit-taking
October 16, 2009
The European single currency slid on Friday against the dollar as many currency investors opted to take profits after bumper gains earlier this week, dealers said.
In late morning London deals, the euro eased to 1.4908 dollars, from $1.4941 (R10.96) late in New York on Thursday.
Against the Japanese currency, the dollar firmed to 91.09 yen from 90.57 yen late on Thursday.
Despite modest falls, the euro remained within grasp of the 14-month peak of $1.4968 that was struck on Thursday when growing economic optimism persuaded investors to seek assets that are deemed to carry more risk.
Currency analyst Daragh Maher, who works for Credit Agricole division Calyon, said that euro/dollar was looking overstretched.
"The stretch is becoming extreme and potentially uncomfortable in some instances. In particular, there is likely to be growing nervousness over the rise of the euro," Maher said.
Market participants were meanwhile awaiting company earnings from US giants Bank of America (BoA) and General Electric.
On the US economic data radar will be industrial production data, Treasury International Capital (TIC) figures and the University of Michigan sentiment index.
"There are some points of distraction for the market with US industrial production, TIC and Michigan Confidence scheduled for release," said Maher.
"We will also see earnings from some of the tech companies and BoA, all of which could colour the currently upbeat mood in risk appetite.
"But barring surprises, a tired and jaded market may simply continue to target additional dollar weakness, happy to play the trend.
"The air may be thin, the oxygen lacking, but it does not yet feel like the peak (for the euro) has been reached," he added.
Elsewhere, traders bought high-yielding currencies such as the Australian dollar, which recently hit the highest level in 16 months against the greenback.
Australia last week became the first major economy to hike rates since the financial meltdown last year and is expected to move more quickly than the US, Europe and Japan to tighten monetary policy as its economy recovers.
Markets expect the Australian central bank to further raise interest rates by at least 50 basis points by the end of the year, NAB Capital analysts said.
Australia lifted its key lending rate to 3.25 percent last week, having slashed it from 7.25 in response to the financial crisis.
In London on Friday, the euro was changing hands at $1.4908 against $1.4941 late on Thursday, at 135.78 yen (135.36), 0.9144 pounds (0.9180) and 1.5166 Swiss francs (1.5169).
The dollar stood at 91.09 yen (90.57) and 1.0177 Swiss francs (1.0147).
The pound was at $1.6304 dollars (1.6268).
On the London Bullion Market, the price of gold fell to $1 048 an ounce from $1 053.50 an ounce late on Thursday. - Sapa-AFP
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