Monday, 31 Jan 2011

EUR Boosted on Inflationary Figures; Diminished Egypt Concern

A jump in euro zone inflation lifted the euro above $1.37 on Monday and bolstered the view interest rates in the region could rise more quickly than in the United States and other advanced economies.

That helped the euro reverse the losses it suffered on Friday as unrest in Egypt drove up oil prices and sparked a safe-haven bid for dollars and Swiss francs.

Asian central banks and some Middle East accounts were among the most active euro buyers, traders said, and some said the euro could renew a march toward $1.40 in the weeks ahead, provided trouble in Egypt does not spread to other countries. While protesters filled the streets of Cairo for a seventh straight day, investors seemed to take heart that violence and disorder had at least not worsened.

The euro rose as high as $1.3739 and was last up 0.6 percent at $1.3700. Overnight, $1.3570, the 50 percent retracement of its November-to-January decline, acted as support, bringimmng in buyers from Asia and the Middle East.