FOREX-Euro up versus dollar on bets of good German Ifo data
* Good Ifo numbers could lift euro towards 1-month highs
* Sterling firmer before UK GDP numbers
* NZD up, mkt sees hawkish tint in RBNZ statement
By Anirban Nag
LONDON, July 25 (Reuters) - The euro rose against the dollar on Thursday, inching towards previous day's one-month high on expectations of improved German business morale that would bolster views of a euro zone recovery.
The common currency had hit a one-month high of $1.3256 on Wednesday after surveys showed a quicker-than-anticipated expansion in German and French private sector business activity. The German Ifo survey, based on a monthly survey of some 7000 firms, is forecast to show current conditions improved in July as the did the overall business climate.
The euro was up 0.15 percent at $1.3217 with the single currency also taking comfort from a narrowing of yield spreads between U.S. Treasuries and German Bunds . The spreads had widened to their highest in seven years last week but have since narrowed.
"Lots of people are expecting good German data again after the PMI surveys yesterday and positioning into it," said Adam Myers, European head of FX strategy at Credit Agricole.
"The euro could rise to $1.3230/50 after which it could reverse as we are expecting good U.S. numbers later in the session."
U.S. weekly initial jobless claims and durable goods data for June are due on Thursday and a good set of numbers, especially from the labour market, could set markets abuzz with expectations that the Federal Reserve may start withdrawing stimulus as early as September. That would help the dollar.
In early European trade though, the euro's gains were pushing the dollar index down. The index was 0.2 percent lower on the day at 82.14, hovering just above a one-month low of 81.926 set on Tuesday.
Sterling, meanwhile, rose 0.3 percent to $1.5360 as investors bet on strong UK growth numbers which would indicate a sustained recovery is taking hold. It hit a one-month peak of $1.5393 on Tuesday.
Data on Thursday is forecast to show the UK economy grew 0.6 percent in the second quarter from the previous quarter. This would be double the first quarter's 0.3 percent.
Elsewhere, the New Zealand dollar was up 1 percent at $0.8000, as investors detected a more hawkish tone from the Reserve Bank of New Zealand. While the central bank reiterated it expected to keep rates steady through to year-end, it noted that a tightening would likely have to come at some point.
"It was slightly on the hawkish side, relative to expectations," said Jane Turner, a senior economist at ASB Bank.
"There was a lot more emphasis on the potential inflation spillover from construction costs and housing market," she added. "We still expect the RBNZ to first lift the official cash rate in March 2014."
If that prediction proves correct, New Zealand could well be the first developed nation to begin tightening this cycle.
- Hong Kong police use pepper spray to disperse pro-democracy protesters |
- Dozens arrested at Made in America music festival in Los Angeles
- Putin calls for talks on east Ukraine 'statehood'; rebels fire on ship |
- Pakistani protesters push closer to PM house, force TV off the air |
- Israel claims West Bank land for possible settlement use, draws U.S. rebuke