Euro regains footing as data pick-up tempers ECB rate cut bets

Wed Nov 6, 2013 7:33am EST
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By Marc Jones

LONDON (Reuters) - The euro rose off a seven-week low on Wednesday as talk of the U.S. Federal Reserve extending the lifespan of its stimulus program and some robust data offset expectations of more European Central Bank easing in coming months.

With uncertainty high over what steps the ECB might hint at after its meeting on Thursday, investors focused on fresh euro zone data as solid services PMIs and a surge in German factory orders offset some weaker retail figures.

The services report pointed to a continued gradual recovery in the 17-country euro zone but one that remains painfully slow in many parts of the bloc.

European shares had already inched to a new five-year high by the time the data came out. A batch of better-than-expected results provided the leg up, including from world No. 1 jobs agency Adecco ADEN.VX, which flagged increasing demand in Europe. .EU

The euro held onto gains at $1.3520, having jumped after the German data and risen steadily from $1.3469 overnight, although expectations of a dovish turn by the ECB kept a lid on the shared currency.

"For the next couple of days we have such a heavy events schedule, with the ECB tomorrow and then U.S. payrolls on Friday, that I think we are looking at the market battening down the hatches," said Ned Rumpeltin, head of G10 FX strategy at Standard Chartered.

The dollar, meanwhile, pared its recent gains against a basket of major currencies and dipped 0.3 percent .DXY, even while it edged up on the Japanese yen to 98.60.

Comments from Fed policymaker John Williams, who said the central bank should wait for stronger evidence of growth momentum before trimming bond-buying, helped balance out a surprisingly strong U.S. service sector report.   Continued...

A man walks through the lobby of the London Stock Exchange August 5, 2011. REUTERS/Suzanne Plunkett