Published: Tue, 24 Feb 2009 21:14:07 +0100

Euro Gets Lift From Equity Markets

(CEP News) - The euro gained more than 1.5 cents against the U.S. dollar on Tuesday as a rebound in stock markets spurred buying.

The euro has made gains in three of the past four sessions after falling to a 10-week low last week. Most recently, it was up 0.0163 to 1.2857 USD.

"The real issue for the euro is that it's trading as a derivative of equity markets," said Adam Boyton, senior FX strategist at Deutsche Bank.

At 3 p.m. EST, the S&P 500 was on pace for a 3% gain.

The euro and other currencies have benefitted from broad-based yen weakness. The Japanese currency is down more than 2% against all of the most actively traded currencies.

The recent declines in the yen come as it loses its status as a safe-haven currency due to a rapid contraction in the Japanese economy. Boyton said the U.S. dollar could suffer a similar fate.

"Eventually, it will break down and people will focus on a range of things ... In a way, that's a good sign," he said.

Elsewhere in foreign exchange, the Canadian dollar is up 0.0060 to 0.8059 against the U.S. dollar (1.2409 USD/CAD) and up 2.44 to 78.11 against the yen.

The U.S. dollar is up 2.30 to 96.91 against the yen and the Dollar Index is down 0.363 to 86.877.

The euro is up 0.0066 to 1.5936 against the Canadian dollar, up 0.0104 to 0.8865 against the pound sterling and is higher by 4.36 to 124.45 against the yen.

The pound sterling is up 0.0002 to 1.4489 against the U.S. dollar and down 0.0136 to 1.7976 against the Canadian dollar.

All data taken at 3:00 p.m. EST.

By Adam Button, abutton@economicnews.ca, edited by Sarah Sussman, ssussman@economicnews.ca