The euro strengthened against the US dollar yesterday when equity market gains in Europe and the US reduced investors’ appetite for safe-haven currencies. The single currency finished up 0.45% against the greenback at $1.3003, having started the day at $1.2945. Early in the session, US stocks fell after Morgan Stanley reported a second quarterly loss and significantly reduced its dividend. However, a report by the Office of Federal Reserve Housing Enterprise Oversight showing a rise in American house prices in February triggered a rebound on Wall Street, as investor jitters over the state of the global economy eased. As a result, their appetite to buy into the perceived riskier euro increased. Demand for the single currency more generally was also driven by UK Chancellor Alistair Darling’s optimistic budget forecast that the British economy will contract by 3.5% in 2009 before resuming growth next year. His comments sparked a mass sell-off of sterling, with investors looking to the euro and US dollar in particular. The strength of eurozone equity markets was also driven by the news that Credit Suisse Group AG, Switzerland’s largest bank by market value, returned to profit in the first quarter, increasing investor sentiment that the region is well placed to come out of recession.
There are some important pieces of data released today in both the eurozone and America. At 09.00 BST, the European Monetary Union’s Current Account data is released. In the US, the National Association of Realtors releases its Existing Home Sales for March and Month-on-Month at 15.00 BST, which should provide investors with a clearer indication of the state of the US housing market.
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