“The euro rose toward the strongest level in more than 2 1/2 years versus the yen as apurchasing managers’ index showed services output in the region shrank less than initially estimated, boosting demand for the currency.
The 17-nation euro reversed an earlier decline as European stocks rallied from their biggest plunge in more than three months. European Central Bank policy makers are due to meet this week. Australia’s dollar weakened after the central bank said the inflation outlook allowed scope for further interest-rate cuts. The yen fell at least 0.6 percent against all 16 of its major peers after Bank of Japan (8301) governor Masaaki Shirakawa said he will step down earlier than previously planned.
“The final PMI readings for Europe were obviously on the stronger side of expectations, so that has provided a bit more of a boost for the euro,” said Ian Stannard, the head of European foreign-exchange strategy at Morgan Stanley in London. “The underlying trend in the euro is still up but we need to be cautious going into the ECB meeting.”
The euro rose 1.4 percent to 126.56 yen at 8 a.m. New York time. It touched 126.97 yen on Feb. 1, the strongest since April 2010. The shared currency strengthened 0.2 percent to $1.3544, after dropping to $1.3459, the lowest since Jan. 29. The yen slid 1.1 percent to 93.43 per dollar.
The JPMorgan G7 Volatility Index, calculated based on premiums on currency options, climbed to 9.3 percent, the most since Aug. 2. It had dropped to a more than five-year low of 7.06 on Dec. 18.
The shared currency may slide to $1.3350 in the days before the ECB meeting, before rising to as much as $1.40 in the following weeks, Stannard said.
Purchasing Managers
An index based on a survey of purchasing managers in the services industry rose to 48.6 from 47.8 in December, London- based Markit Economics said in a report today. That’s above an initial estimate of 48.3 published on Jan. 24. A reading below 50 indicates contraction. A composite index of factory and services output increased to 48.6 from 47.2….”
If you enjoy the content at iBankCoin, please follow us on Twitter
