Forexpros – The euro was higher against the dollar and the yen on Thursday, but gains were limited as a downbeat assessment of the outlook for growth in the euro zone offset better-than-expected data on German business climate.
During European late morning trade, the euro was higher against the U.S. dollar, with EUR/USD adding 0.37% to hit 1.3299.
The euro strengthened broadly after German research institute Ifo said its Business Climate Index rose to109.6 in February from a reading of 108.3 the previous month, surpassing expectations for an increase to 108.8.
The data fuelled hopes that the euro zone’s largest economy was weathering the impact of the debt crisis in the region and may avoid slipping into a recession.
But the single currency’s gains were capped after the European Commission’s forecast for economic growth showed that the euro zone’s economy would contract by 0.3% in the first quarter after dropping by the same amount in the last quarter of 2011. Two consecutive quarters of contraction signal a recession.
Meanwhile, uncertainty over Greece’s ability to implement austerity measures needed to qualify for a EUR130 billion bailout package and avoid defaulting on its debt continued to weigh on risk appetite.
Elsewhere, the euro was higher against the pound, with EUR/GBP rising 0.30% to hit 0.8461.
The Confederation of British Industry said in a report that factory orders rebounded to hit a six-month high this month, rising by 13.0 points to minus 3.0, from a reading of minus 16.0 in January.
But sentiment on the pound remained weak after the minutes of the Bank of England’s February meeting showed that some policymakers favored a larger increase in the bank’s asset purchase program than the bank implemented this month, fuelling speculation that the central bank will opt for more easing later in the year.
The single currency was trading close to a three-month high against the broadly weaker yen, with EUR/JPY up 0.17% to hit 106.56.
Japan’s Prime Minister Yoshihiko Noda said earlier that he wants to have one-on-one talks with the Bank of Japan governor more frequently to boost cooperation with the central bank.
The comments came after the BoJ’s decision last week to increase the size of its asset-purchase program to JPY30 trillion, sending the yen broadly lower.
The euro was fractionally lower against the Swiss franc, with EUR/CHF dipping 0.04% to hit 1.2053.
The euro slipped against the Australian and New Zealand dollars, but remained supported above recent record lows, with EUR/AUD shedding 0.20% to hit 1.2430 and EUR/NZD slipping 0.13% to hit 1.5958.
The euro edged higher against the Canadian dollar, with EUR/CAD easing up 0.14% to hit 1.3266.
Later in the day, the U.S. was to produce government data on initial jobless claims.
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