Euro surges against dollar on recovery optimism

NEW YORK (AFP) - The euro pushed above 1.46 dollars Thursday, hitting a nine-month high, as rising economic recovery hopes turned the market away from the US currency, seen as a safe haven in times of uncertainty.

At 2100 GMT, the single European currency was trading at 1.4583 dollars, up from 1.4564 late Wednesday in New York.

The dollar fell to 91.74 yen from 92.00 yen on Wednesday.

The euro topped the 1.46-dollar level for the second consecutive day, touching 1.4613 dollars, its highest peak in nine months.

"I don't think there is anything particularly new in terms of fundamentals drivers, it looks like with the break of important technical levels the move lower of the dollar has gathered some momentum," said Vassili Serebriakov of Wells Fargo bank, adding that "the overall mood is negative" for the dollar.

The euro had traded in a narrow band around 1.40 dollars for the past few months, but broke out of the range this week.

Most analysts expect the dollar to weaken amid a growing sense that recovery from the worst global economic crisis in decades is taking root.

With the economic outlook brightening, traders tend to shun the dollar in favor of riskier currencies that appeared more profitable, like the euro.

On Wall Street, the main indexes jumped to fresh 2009 highs as upbeat corporate news and generally positive economic data helped the market extend its winning streak to a fifth day.

Better-than-expected US employment and international trade data encouraged investors to move away from the dollar.

The US government said new jobless compensation claims fell to 550,000 in the past week, in a sign of further healing in the critical labor market.

The US trade deficit widened sharply in July amid a record surge in imports and a rise in trade volume, official data showed in a report suggesting the world's largest economy, and other economies, are pulling out of recession.

Jennifer Lee at BMO Capital Markets said the reports were mostly positive.

"The claims numbers are encouraging, and suggest that the painful pace of job cuts will continue to ease, slowly," she said.

"And the impressive import numbers, if they hold up, point to a pickup in US consumer spending."

The British currency gained support after the Bank of England left its monetary policy unchanged, holding its key lending rate at a record low 0.5 percent and maintaining emergency stimulus measures to prevent the economy from sliding deeper into recession.

The pound rose to 1.6651 dollars late Thursday from 1.6544 Wednesday.

The central banks in Canada, South Korea and New Zealand also held their key lending rate at record lows in a bid to allow signs of recovery to take root.

"The theme for the second half of 2009 is continued easing, but a focus on who might try to exit first," said Andrew Busch of BMO Capital Markets, who said that Australia, India and China remained the leading candidates.

"With the cutback in loan growth, you can argue that China is already cutting back on stimulus. The takeaway is that the Far East is going to move first," he said.

In late New York trade, the dollar fell to 1.0381 Swiss francs from 1.0404 late Wednesday.