AFP: Euro soars above US$1.48; gold hits record US$1,066.76
The euro leapt above US$1.48 in choppy trade on Tuesday as dealers digested a mixed German investor confidence survey, while the British pound fell on news of sliding inflation. In late morning trading here, the European single currency fell as low as US$1.4762 after publication of Germany's ZEW survey, before jumping as high as US$1.4833.
The euro later pulled back to US$1.4827, up from US$1.4771 late in New York on Monday.
Against the Japanese currency, the dollar firmed to 89.91 yen from 89.85 yen on Monday.
In commodity trade, gold hit a record high US$1,066.76 an ounce. The weak greenback makes the precious metal cheaper for investors holding other currencies, thereby boosting demand, traders said.
Germany's key ZEW survey showed Tuesday that Europe's top economy was recovering from its worst recession in 60 years — but any upturn was likely to be gradual and the road to recovery bumpy.
The ZEW index, which measures the confidence of financial market players in the future health of the economy, fell fractionally to 56.0 from 57.7 in September.
This was well above the long-term average of 26.7 for the series but slightly worse than analysts surveyed by Dow Jones Newswires had forecast.
“Euro/dollar took a tumble on the back of a much weaker-than-expected German ZEW survey, though buyers quickly emerged lifting the euro back towards the 1.4800 level,” said Forex.com analyst Jane Foley.
In Britain, the pound fell against rival currencies after official data showed that the annual inflation rate slid to 1.1 percent in September, the lowest level for five years, as energy prices steadied.
Consumer Prices Index (CPI) annual inflation — the government's target measure — was 1.1 percent in September, down from 1.6 percent in August.
Economists said the British pound faced selling pressure because dealers felt that the Bank of England was more likely to increase its radical quantitative easing program.
Under QE, the British central bank creates money by purchasing bonds from commercial institutions in the hope of boosting lending to businesses and individuals.
In London on Tuesday, the euro was changing hands at 1.4761 dollars against 1.4771 dollars late on Monday, at 133.03 yen (132.75), 0.9398 pounds (0.9348) and 1.5168 Swiss francs (1.5172).
The dollar stood at 89.91 yen (89.85) and 1.0249 Swiss francs (1.0267).
The pound was at US$1.5744 (1.5799).
On the London Bullion Market, the price of gold rose to US$1,062.85 an ounce from US$1,058.75 an ounce late on Monday.
