The Euro falls against the Dollar of safe haven investments

The euro fell against the dollar on investor speculation that a report today will show Europe’s jobless rate climbed, and fears that GM and Chrysler may go into bankruptcy thus leading traders and investors to the Dollar safe haven. “The economic recession is looking worse so the euro is very much a fundamentally weak currency,” said Sharada Selvanathan, a foreign-exchange strategist in Hong Kong at BNP Paribas SA. “The risk is skewed toward the downside for the euro.” Europe’s currency also fell as investors increased bets the European Central Bank will lower borrowing costs in coming months. The Dollar Index, used by the ICE to track the greenback against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, gained 0.5 percent to 85.877. The EUR/USD is currently trading at $1.3180 as of 8:35am, GMT.

Sterling edged up against the dollar on Tuesday, helped by less gloomy consumer confidence data. The pound recovered after falling against the dollar the previous day (Monday) as U.S. auto and bank sector problems fanned risk aversion, benefitting the dollar. Data on Tuesday showed British consumers grew less gloomy in March as lower mortgage repayments boosted disposable income. "Sterling has been quite resilient to the fall in financial equity prices," said Barclays in a note. "Part of this may be related to better-than-expected economic data." The USD/GBP is currently trading at $1.4335 as of 8:50am, GMT.

The Australian and New Zealand dollars fell on concern weakening economic growth will lead the two nations’ central banks to lower interest rates in the near future, lowering the appeal of their assets. The currencies weakened against the greenback and the yen as U.S. lawmakers said the Obama administration is prepared to let General Motors Corp. and Chrysler LLC go bankrupt. “The retail spending data shows consumers are extremely cautious and really leaves the door open for a rate cut from the Reserve Bank of Australia next week,” said Besa Deda, chief economist at St. George Bank Ltd. in Sydney. The AUD/USD is currently trading at 0.6890 as of 9:00am, GMT.

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