Greenback recovers early losses as risk erodes

Early gains for the single currency, following the positive Ifo survey, were swiftly recovered by the greenback to close the day at 1.4255.

• The euro initially hit the day’s high of 1.4351 against the dollar, after the German Ifo business survey notched up its strongest monthly gain since 1996.
  
• But these gains were swiftly erased as details of a US durable goods report for July were less upbeat than expected, eroding risk appetite in the market and sending investors running to the relative safety of the US dollar.
  
• As a key measure of business demand, the weak durable goods data reminded investors that the US economy still faces huge challenges as it tries to emerge from deep recession.
  
• The single currency was also hampered by a poor day’s trading in the European equity markets which, even after a late rally, saw both the FTSE and the DAX closing over half a percent down.
  
• This currency pairing is trading at a steady level this morning, as the markets wait for crucial economic data to emerge from the US later today.