Euro Trades Near Three-Week High

The euro traded near a three-week high against the dollar as European stocks advanced for a fourth day and a report showed unemployment declined in Germany, the region’s largest economy.

The currency shared by 15 European nations gained versus the Brazilian real and Canadian dollar as every major stock market in the region rose. German unemployment dropped in November, withstanding the worst recession in 12 years. Indian rupee forwards fell on speculation overseas investors will shun the nation’s assets after terrorist attacks in Mumbai prompted regulators to shut markets.

The euro was at $1.2879 at 5:16 p.m. in London, from $1.288 yesterday, when it fell 1.4 percent. It traded as high as $1.2968, close to its strongest since Nov. 5. It bought 123 yen from 123.24 yen. The dollar declined to 95.5 yen, from 95.67 yesterday, when it rose 0.5 percent. The euro strengthened 1.1 percent to 2.8988 real and 0.03 percent versus the Canadian dollar to C$1.5885.

Rupee one-month non-deliverable forwards fell 0.7 percent to 50.35 per dollar after terrorists targeted foreigners in five-star hotels in Mumbai, leaving 101 people dead and 290 injured. Forwards are agreements in which assets are bought and sold at current prices for delivery at a later specified time and date. Non-deliverable contracts are settled in dollars.

The dollar fell against the euro and the pound after the biggest drop in U.S. consumer spending in seven years reported yesterday fanned speculation the Federal Reserve will cut interest rates to help avert a prolonged recession. The currency also slid as the Fed’s $800 billion plan to revive mortgage lending and consumer loans sent 10-year credit-default swaps on U.S. government bonds to a record high yesterday.

Currency moves may be exaggerated today because U.S. financial markets are closed for the Thanksgiving Day holiday.

The ICE’s Dollar Index, which tracks the greenback against the currencies of six major trading partners, was little changed at 85.687. The U.S. Commerce Department report yesterday showed consumer spending dropped 1 percent in October.,
11/27/2008 10:04:05 AM