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FOREX-Dollar firms against euro on weak German PMI data
March 24, 2014 / 3:40 PM / 4 years ago

FOREX-Dollar firms against euro on weak German PMI data

(Updates prices, adds analyst comments, dateline; previous
LONDON)
    * Euro fails to latch on to gains made on French PMI data
    * Yellen comments continue to support dollar
    * Yuan recovery helps Aussie

    By Sam Forgione
    NEW YORK, March 24 (Reuters) - The dollar rose against the
euro on Monday after signs of slower growth in Germany worried
traders and expectations of tightening U.S. monetary policy
continued to support the greenback. 
    Data showed the German private sector slowed in March,
disappointing investors who were positioned for a better reading
on the euro zone's largest economy. 
    The euro's losses reversed from an earlier European session
high after surveys showed French business activity grew in March
at its fastest in more than 2 1/2-years, beating forecasts for
further contraction. 
    The weak German data triggered the potential for more
monetary easing from the European Central Bank, which would
likely weaken the euro further, said Boris Schlossberg, managing
director of foreign exchange strategy at BK Asset Management in
New York. "Germany is going to determine ECB policy," he said. 
    Partly supporting the euro has been the perception that the
European Central Bank is reluctant to ease monetary policy any
further. The euro's resilience prompted the president of the
European Council, Herman Van Rompuy, to complain on Friday that
the currency was too strong for euro zone exporters.
    Investors snapped up the dollar last week as they bet on a
U.S. interest rate hike early in 2015, after Fed Chair Janet
Yellen surprised markets by raising the prospect of such a move.
    Traders said that Yellen's comments underpinned the dollar's
strength versus the euro on Monday. Traders also said further
gains for the dollar depended on the strength of coming data.
Any acceleration in the U.S. economic recovery is likely to
bolster expectations of an earlier normalization of Fed policy.
    The euro last traded down 0.13 percent against the
dollar at $1.3775. The dollar index, a gauge of the
dollar's performance against a basket of major currencies, was
last up 0.1 percent. 
    The dollar last traded down 0.02 percent against the
Japanese yen at $102.23. Declines in U.S. stocks on
Monday pushed up demand for the yen as a safe-haven currency,
said Thierry Albert Wizman, global interest rates and currencies
strategist at Macquarie Ltd in New York.
    All three major U.S. stocks indexes fell, with the Standard
& Poor's 500 last down 0.73 percent. 
    Financial data firm Markit said its "flash" or preliminary
U.S. Manufacturing Purchasing Managers Index slipped to 55.5 in
March from 57.1 in February. Readings above 50 indicate
expansion. The data had little effect on the dollar.
 
    A recovery in the Chinese yuan helped the Australian dollar
move up from lows. The Aussie, which is used as a more liquid
proxy by investors and speculators to back their views on China,
had dipped after a survey showed activity in Chinese factories
contracted again in March. 
    China's flash Markit/HSBC Purchasing Managers' Index fell to
an eight-month low of 48.1 in March from February's final
reading of 48.5. 
    The Aussie dropped to $0.9048 on the March number,
but it kept clear of last week's low of $0.8990 and later
drifted back to $0.9124, 0.42 percent higher on the day.

 (additional reporting by Anirban Nag in London; Editing by Nick
Zieminski)

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