MW: Euro weakens as European Union grows wary of currency's rise
LONDON (MarketWatch) -- The U.S. dollar was on the rise Thursday, gaining ground versus the euro after European Union officials signaled discomfort with the single currency's recent rise.
According to news reports, E.U. Economic and Monetary Affairs Commissioner Joaquin Almunia said finance ministers from the 16 nations that share the euro would discuss the currency's rise in order to prepare a common position ahead of a meeting of Group of Seven officials in Istanbul this weekend.
The move sent the euro tumbling through the $1.46 level versus the dollar. Following on the heels of similar remarks by French President Nicolas Sarkozy at the Group of 20 summit in Pittsburgh last week, the remarks indicate European authorities are becoming increasingly worried about the euro's ongoing rise versus the dollar, said Boris Schlossberg, director of currency research at GFT.
The euro (CUR_EURUSD 1.45, -0.01, -0.64%) traded at $1.4546, down from $1.4634 in afternoon trade in New York Wednesday. The single currency notched new one-year highs versus the dollar last month and rose 3.9% in the third quarter.
The euro had traded below $1.25 in March, before beginning a steady upward March as global equity markets began a rebound and investors showed a steady rise in risk appetite.
Eurostat on Thursday said unemployment in the 16-nation euro zone rose to 9.6% in August, up from 9.5% in September and the highest level in more than 10 years. The figure was in line with economists' forecasts.
Meanwhile, the Markit final euro-zone purchasing managers index for September posted a stronger than expected rise to a 16-month high of 49.3 from 48.2 in August. A reading of less than 50 indicates a majority of managers saw a decline in activity, while a figure of more than 50 signals expansion.
The dollar index (DXY 77.14, +0.48, +0.63%) , a measure of the greenback against a trade-weighted basket of currencies, traded at 77.024, down slightly from 77.085 in North America late Wednesday.
Markets are awaiting weekly U.S. initial jobless claims data at 8:30 a.m. Eastern. Strategists at Bank of Scotland said a rise back above the 550,000 level could add to risk aversion ahead of the September unemployment report due for release on Friday morning.
Other U.S. data on the way Thursday include personal income and the related PCE deflation inflation gauge for August; the Institute for Supply Management's manufacturing gauge for September; pending home sales for August; construction spending for August; and car sales data for September
The dollar bought 89.90 yen, up from 89.78 yen versus the Japanese currency on Wednesday.
The British pound slipped to $1.5968, down 0.2% versus the dollar. The broadly euro lost ground versus sterling, however, falling 0.5% to 91.01 pence.
Manufacturing activity in Great Britain declined for a second consecutive month in September, the CIPS/Markit U.K. purchasing managers index indicated Thursday. September PMI slipped to 49.5 in September from 49.7 the previous month. Economists surveyed by Dow Jones Newswires had forecast a rise to 50.3.
The dollar jumped 1.4% versus the South African rand, which traded at 7.5072 to the dollar, after India's Bharti Airtel Ltd. and South Africa's MTN Group called of a proposed $24 billion merger of the telecom firms.
