WORLD FOREX:Euro Hits Session High After 15-Wk Low Vs Dlr

WORLD FOREX:Euro Hits Session High After 15-Wk Low Vs Dlr
    By Riva Froymovich    Of DOW JONES NEWSWIRES  

NEW YORK (Dow Jones)--The euro hit a session high against the dollar early in New York, bouncing off a 15-week low, as U.S. stock futures swung up.

Still, its highest mark Wednesday is below late day-earlier trading levels.

Risk appetite rebounded on hopes that China could lead a worldwide economic rebound following promising data and ahead of the National People's Congress.

Data overnight showed China's Purchasing Managers Index, a gauge of nationwide manufacturing activity, rose to 49 in February from 45.3 in January, offering tepid signs China may be nearing a bottom amid the domestic economic gloom.

In addition, the market is considering the possibility of further stimulus measures from the coming meeting of local, provincial and national leaders in China, though some say these expectations are too much.

The euro climbed to $1.2566 from $1.2457, its lowest level since Nov 21.

Weakness in the euro versus dollar this week, said analysts at Credit Suisse, "is consistent with eroding euro vs. U.S. yield differentials."

Meanwhile, the dollar is also up vs. the yen, building on a one-month advance. It is reaching for 100 yen and rose as high as Y99.48 overnight, matching a Nov. 10 top.

Ahead Wednesday, traders are awaiting the release of the February ISM Non-Manufacturing Index at 10 a.m. EST.

Wednesday morning in New York, the euro was at $1.2548 from $1.2572 late Tuesday, and the dollar was at Y99.41 from Y98.27, according to EBS. The euro was at Y124.72 from Y123.53. The U.K. pound was at $1.4115 from $1.4075, and the dollar was at CHF1.1784 from CHF1.1753 Tuesday.

Market sentiment was initially struck overnight by a surprising gloomy fourth quarter gross domestic product for Australia. It showed the economy contracted by 0.5%.

Elsewhere, Central and Eastern European central bankers and market regulators released a document saying they were concerned about "often simplified and misleading" information on risks facing financial sectors in these countries.

The initial statement didn't include Hungary, which made the country's forint weaken to a new all-time low against the euro, while other free-floated currencies in the region continued to post gains.

"The supervisory authorities of the following CEE Member States: the Czech Republic, Slovakia, Poland, Romania and Bulgaria express their concerns about the publicly announced initiatives warning about the risks to the old [European Union] member states' banks due to high exposures in CEE countries," the common statement said.

These concerns have plagued the euro.

Meanwhile, Hungarian Prime Minister Ferenc Gyurcsany proposed in a letter to the European Commission that the European Central Bank accept local government securities from noneuro-zone member states as collateral in ECB loan operations.

Such a step would provide broader support for European banks outside the 16-country euro zone and stabilize financial markets, Gyurcsany said in a letter dated Feb. 26 to European Commission President Jose Manuel Barroso. The letter was obtained by Dow Jones Newswires.

     Canada Morning  

The Canadian dollar is little changed in narrow dealings early Wednesday but remains within sight of recent four-year lows around the C$1.3000 mark.

The Canadian currency has benefited at the margins from stronger oil prices and generally better global risk appetites, though sentiment toward the currency remains guarded after a fairly dovish Bank of Canada interest-rate statement Tuesday.

The Canadian central bank sounded less optimistic about the likelihood of a late 2009 rebound for the Canadian economy and held out the prospect of an eventual turn to quantitative easing in Canada.

Currency strategists at Scotia Capital in Toronto said that as "the prospect of quantitative easing has generally not been swallowed easily by currency markets," the Canadian central bank's mention of that possibility in Canada "is just another fundamental factor that should help keep the Canadian dollar a little more on its back foot" for the time being.

Early Wednesday, the dollar was at C$1.2887, from C$1.2902 late Tuesday.

-By Riva Froymovich, Dow Jones Newswires; 201 938-5063; [email protected]

(Paul Evans in Toronto and Margit Feher in Budapest contributed to this report.)

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(END) Dow Jones Newswires

March 04, 2009 08:54 ET (13:54 GMT)

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