Euro rebounds versus Swiss franc after hitting all-time low
By Deborah Levine and William L. Watts, MarketWatch
NEW YORK (MarketWatch) — The U.S. dollar gained ground against the euro but remained lower versus the Japanese yen Thursday, as reports showed U.S. jobless claims and durable-goods orders fell while consumer spending and incomes rose.
Currencies stayed in tight ranges in quiet-pre-holiday trading, with the dollar heading towards a weekly gain that will add to its rise in 2010.
The dollar index (DXY 80.69, -0.04, -0.05%) , which measures the greenback against a basket of six major currencies, traded at 80.725, paring an earlier decline to sit down slightly from 80.781 in North American trade late Wednesday.
The dollar index has gained about 0.5% this week, on track for a 3.7% gain this year.
The euro (EURUSD 1.3069, -0.0028, -0.2138%) slipped to $1.3069, down from $1.3094 Wednesday.
The euro has lost 0.9% this week and is headed towards an 8.8% decline for the year. In June, it fell under $1.20 for the first time since 2006.
The U.S. unit slipped to buy 83.10 Japanese yen (USDYEN 83.0500, -0.4900, -0.5865%) , down from ¥83.59 late Wednesday.
The dollar has fallen 1% against the yen this week and has depreciated nearly 11% in 2010. In November, the dollar sunk to its weakest level against the Japanese currency since 1995, when the all-time low was set.
In an early round of economic reports, the U.S. Labor Department said jobless claims slipped in the latest week. See more on jobless claims.
The Commerce Department said that durable-goods orders fell a bigger-than-expected 1.3% in November. Read about durable goods.
A separate report showed consumer spending and income rose last month. Read more about consumer spending.
“These reports suggest that the improvements that have been seen in U.S. economic activity in the past few months are being sustained,” said Millan Mulraine, an economic strategist at TD Securities. “All indications are for the pace of economic growth to accelerate in the fourth quarter, with GDP growth expected to be in the 3.0% region.”
Later reports showed new home sales in the U.S. rose last month, but at a slower pace than economists expected. Separately, consumer confidence improved this month, according to a private survey. See story on new-home sales.
Alongside positive comments on U.S. growth on Wednesday from Philadelphia Federal Reserve President Charles Plosser, “the benign mood should last through until New Year unless the bond market wrecks the party,” said Kit Juckes, head of forex strategy at Societe Generale.
On Thursday, the bond market remained calm, with benchmark 10-year Treasury yields (UST10Y 3.38, +0.04, +1.08%) rising modestly. Read about Treasury bonds.
The euro had little reaction to a German newspaper report that Berlin has outlined a proposal for a new euro-zone stability fund.
Earlier, France’s statistical agency reported a 2.8% monthly rise in consumer spending, boosted largely by a jump in auto spending.
Swiss franc
The euro rebounded 0.6% versus the Swiss franc after falling to all-time lows versus the currency this week. The euro changed hands at 1.2560 francs.
Steve Barrow, currency strategist at Standard Bank, said the euro’s recent weakness versus the franc looked “pretty ominous,” potentially signaling a desire by traders to stage an attack on the euro early in the new year.
Seasonal factors tend to be a positive factor for the euro versus the dollar this time of year and may have halted a bigger fall by the currency pair for now, he said. Also, U.S. stocks have outperformed European equities in the fourth quarter, which means any year-end reweighting of global stock positions could involve buying euro-zone stocks and the euro.
“With this in mind, some euro bears might prefer to hold their fire until 2011, rather than take a chance now,” he said, in a research note.
