Euro Rallies Ahead Of Franco-German Summit
The euro rose sharply Monday morning in New York, bolstered by increased appetite for risk amid as global stocks continued to rebound.
Gains were most pronounced against the dollar, which was stung by a report showing manufacturing activity contracted in the New York region in August for the third straight month.
The Empire State survey from the New York Federal Reserve Bank slipped to negative 7.7 from negative 3.8 in July.
Meanwhile, focus was shifting to Tuesday’s meeting of French PM Nicolas Sarkozy and German Chancellor Angela Merkel. The leaders of the two European powerhouses will discuss plans to backstop their weaker neighbors.
Euro-zone wide bonds are not expected to be on the agenda.
The euro jumped to $1.4380 versus the buck, at the upper end of a stubborn recent trading range.
The single currency also continued its comeback versus the Swiss franc, rising to CHF 1.14 before leveling off near CHF 1.13.
Only a week ago, the pair was near parity for the first time ever, but the Swiss franc has dropped sharply since Swiss authorities said they would take strong measures to weaken their currency, including a possible peg to the euro.
The euro saw modest strength versus the yen, crawling above Y110.25.
Japan’s gross domestic product was down an annualized 0.3 percent in the second quarter of 2011 compared to the previous three months, the Cabinet Office said on Monday in a preliminary report.
However, the data was much better than expected, beating handily forecasts for a contraction of 0.6 percent following the 0.9 percent decline in the first quarter.
Japanese finance minister Yoshihiko Noda warned that the government would take further steps to weaken the yen. He told the public broadcaster NHK that the strength of the currency poses a threat to the economy’s recovery.
