* Better-than-expected German PMI survey helps euro
* Minutes showed Fed debated raising rates earlier
* Norwegian crown hits 2-month high vs euro after growth
(Updates with Norwegian crown, details, quotes)
By Anirban Nag
LONDON, Aug 21 The euro recovered from a
11-month low against the dollar on Thursday after
better-than-expected German private sector growth data, although
gains were limited given the numbers did little to alter
expectations of more monetary stimulus.
Amongst the biggest movers in the European session was the
Norwegian crown which hit a two-month high against the euro
after forecast-busting growth data. Norway grew 1.2
in the second quarter, double of expectations, and piling
pressure on the central bank to bring forward a rate hike.
The crown also rose sharply against the dollar
despite the greenback being the most sought-after of the
actively-traded currencies in the past few sessions.
The dollar, buoyed by rising Treasury yields and widening
interest rate differentials in its favour, traded just below
11-month peaks against a basket of major currencies, having
scaled those highs after minutes of the Federal Reserve's July
meeting, released on Wednesday, sounded slightly hawkish.
In the euro zone, Germany's private sector grew for a 16th
month running in August, suggesting Europe's largest economy
could expand robustly in the third quarter after it surprisingly
contracted in the second.
Data from France showed business activity was stagnant in
August, although service sector growth picked up.
While the composite euro zone survey showed activity slowing
in August, it offered some relief to the single currency, as
some had feared a far worse reading.
The euro rose 0.1 percent to $1.3278 after the German
survey, having hit an 11-month low of $1.3242 in Asian trade. It
was last trading at $1.3265, steady on the day.
The single currency has shed 1.2 percent in the past week as
the dollar rallied on better-than-expected housing data. Falling
German bund yields, lower money market rates, and a narrowing
euro zone current account surplus helped push the euro lower.
"The German data was better than expected, but it is clear
that economic momentum is declining from a month earlier. While
the euro can bounce a bit, the upside is rather limited from
here," said Yujiro Goto, currency analyst at Nomura.
"The euro should be on a gradual declining path."
RISING U.S. YIELDS
The euro's bounce saw the dollar index slip to
82.253, having earlier hit 82.364, its highest since September.
It broke out of the 81.188/81.716 range that held for much of
The Fed minutes showed policymakers debated whether interest
rates should be raised earlier given a surprisingly strong jobs
market recovery. Most officials, however, wanted further
evidence before changing their view.
In any case, U.S. Treasury yields rose. Two-year
yields hit a two-week high just shy of 0.5 percent.
That underpinned the dollar, which touched its highest in
over four months against the yen at 103.965, not far from
the April peak of 104.13. A break there could see the market aim
for the 2014 high of 105.45 set in January.
Despite overall dollar bullishness, the greenback
underperformed the Norwegian crown. Norway's crown rose to a
two-month high of 8.1565 crowns per euro on solid
volumes and analysts said more gains are likely in store.
"Today's growth figures are likely to carry momentum. We
continue to hold longs in Norwegian crown versus the Swedish
crown, but nearer term strength may be more pronounced against
euro with euro/Norwegian crown eyeing lows on the year around
8.10-8.11," said Josh O'Byrne, analyst at Citi.
(Editing by Nigel Stephenson and Toby Chopra)