MW: Dollar mostly higher; euro recovers from early weakness
Swiss franc weakens on rumored intervention by Swiss National Bank
By William L. Watts, MarketWatch
LONDON (MarketWatch) -- The dollar was mostly higher versus major rivals Wednesday, but the euro managed to erase an earlier loss versus the greenback after stronger-than-expected factory output data from France and Italy.
The euro traded at $1.3616, up from $1.3598 in late North American trading Tuesday. The single currency had been under pressure in early activity, knocked down in part by weaker-than-expected German trade data.
Compared to December 2009, exports fell by 6.3% in Germany in January and imports rose by 6.0%. Germany's seasonally-adjusted foreign trade balance recorded a surplus of 8.7 billion euros in January, official data showed. Read about Germany's trade data.
Meanwhile, data from Italy and France showed stronger-than-expected jumps in manufacturing output in January, which analysts said should bode well for euro-zone output figures due for release on Friday. Read about factory output in Italy, France and Britain.
The euro, meanwhile, posted a temporary jump versus the Swiss franc on rumors the Swiss National Bank intervened to sell francs versus the single currency. The apparent move drove the euro up to an intra-day high of 1.4629 francs from around 1.4610 francs ahead of the action, analysts said. The euro later drifted back to change hands around 1.4618, unchanged on the day.
An SNB spokesman said the central bank doesn't comment on intervention rumors.
The SNB is thought to have intervened several times in the past to slow the franc's rise versus the euro. The SNB earlier this year made clear it viewed intervention as part of its monetary policy amid worries that strong appreciation of the franc versus the euro would hurt the Swiss economy.
The move appears to fit with the SNB's goals, which aren't to change the direction of the euro versus the Swiss franc but to slow the Swiss unit's appreciation, said Peter Rosenstreich, chief market strategist at ACM in Geneva.
"If this was an SNB intervention it was probably one of the smallest we've seen ... it's really about backing traders off ahead of tomorrow's meeting," he said. The SNB holds its quarterly monetary policy meeting Thursday.
The British pound (CUR_GBPUSD 1.4931, -0.0068, -0.4507%) , meanwhile, skidded to $1.4927, from $1.4991.
The Office for National Statistics said manufacturing production fell by 0.9% in January, compared to expectations for a 0.2% monthly rise.
The dollar index (DXY 80.59, -0.01, -0.01%) , which measures the U.S. unit against a trade-weighted basket of six major currencies, traded at 80.585, up slightly from 80.580 late Tuesday.
The greenback bought 90.32 yen, compared with 89.98 yen late Tuesday.
The Australian dollar rose 0.3% against its U.S. counterpart, to 91.57 U.S. cents.
The Aussie "outperformed, with better than expected Chinese trade data underpinning global recovery hopes in the region," said analysts at Action Economics.
China's trade surplus narrowed further in February to $7.6 billion from $14.2 billion in January. When compared with the same month last year, both exports and imports grew at a higher-than-expected rate, with the value of imports climbing 44.7%, reflecting growing domestic consumption in mainland China. The value of outbound goods and services surged 45.7% from February 2009 on a recovery in demand for Chinese goods. Read more on China trade data.
