Forex News
November 29, 2012 @ 1:49 pm

Euro holds gains, dollar sold off on US budget optimism

Markets were upbeat today, with risk appetite leading to a weaker US dollar. Optimism is stronger that the fiscal cliff negotiations will make progress before the holidays after encouraging comments from US House Speaker John Boehner and President Obama yesterday.

Euro is stronger versus the dollar, rising up close to the key $1.30 level in the European session today. The single currency was also boosted by a successful Italian 10-year bond auction which sent yields lower.

Also helping sentiment in Europe is the approval by the EU of the Spanish banking sector bailout plans. On the fundamental side, German unemployment was encouraging with only 5,000 jobs lost in November, resulting in no change in the unemployment rate at 6.9.

In other data, euro zone sentiment data came in better than expected, with economic confidence rising to 85.7, industrial confidence rising to -15.1 and consumer confidence stable at -26.9.

Sterling is flat from yesterday’s close during the London session, not rising as strong as the euro. This was mainly due to domestic data on weaker consumer lending and UK house price data. There was a gain early in the New York session, rising to the mid-$1.60 level.

Dollar was little changed against yen after gaining yesterday, despite risk appetite. Yen was steady despite expectations of more bank of Japan easing due to Japanese opposition party leader Shinzo Abe’s rhetoric. USDJPY hovered above the key 80.00 level up to 82.00 yen.

EURJPY gained, due to broad euro strength reaching highs of 106.80.

Markets were little changed after US GDP data showed the  economy expanded more than previously estimated in the third quarter as a narrower trade deficit and gains in inventory overshadowed a smaller gain in consumer spending. GDP rose at a 2.7 percent annual rate, up from a 2 percent prior estimate.

Also applications for jobless benefits fell by 23,000 to 393,000 in the week ended November 24 from the previous 416,000.

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