Dollar rises on oil and stock gains

European data also spark recovery hopes.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)

Click the chart for current foreign exchange rates.
10 countries, 10 solutions
A financial crisis has engulfed countries from the best-off to the worst-off around the world. The solutions to the problem are varied.
What prison sentence should Bernard Madoff receive?
  • The 12 years his lawyer seeks
  • The maximum 150 years
  • Something in between

LONDON (Reuters) -- The dollar and euro climbed against the yen Monday, as gains in oil prices and U.S. stocks along with better-than-expected sentiment in Europe rekindled hopes of a global economic recovery.

That encouraged investors to sell the yen, viewed as a safe haven along with the dollar, and wade into other higher-yielding assets.

Comments from China, the single biggest holder of U.S. Treasury securities, ruling out sudden changes in its foreign exchange reserve policy bolstered the dollar against the yen earlier in the day.

But currency traders switched their focus to the surge in crude oil prices and rising equities in the afternoon.

"Commodities are really the big story of the day. We've had the Nigerian oilfield attack, which has seen oil spike and that has really driven up the stock market," said Dan Cook, market analyst at IG Markets in Chicago.

"With stocks up, investors are selling the dollar against the euro especially. The yen is also down sharply with equities trading higher," he said.

Oil prices rose over 3% Monday, lifted by word of fresh rebel attacks on oil installations in key African producer, Nigeria, as well as gains in equity markets.

Nigeria's main militant group said its fighters had attacked an oil facility belonging to Royal Dutch Shell in the Niger Delta on Monday, days after President Umaru Yar'Adua proposed an amnesty.

In late afternoon trading, the euro rose 0.2% against the dollar to $1.4078. The European currency also gained support earlier after data showed euro zone economic sentiment improved more than expected in June.

A survey by the European Commission showed economic sentiment in 16 countries using the euro rose to 73.3 points in June from 70.2 points in May.

The dollar was up 0.8% against the yen at 96.02. The euro also gained against the yen, rising 0.9% to 135.16.

The New Zealand dollar rose 0.7% against the greenback to US$0.6502, while the Australian dollar was up slightly at US$0.8081.

China news, U.S. payrolls loom

The earlier China news also was a positive factor for the dollar as Chinese officials said at a meeting of central bankers in Basel at the weekend that the policy governing its currency reserves was stable and consistent with no "sudden changes."

Some analysts, however, were not buying China's comments.

"I don't really believe in what China said (earlier). I don't think their politics are in line with their best interests," said Melvin Harris, currency strategist, at Advanced Currency Markets in New York. "China has way too much dollar debt. They're going to have to diversify in order to manage risk successfully."

The dollar had come under pressure recently as debate intensified about the use of an alternative global currency to the greenback.

Overall, analysts said currency movements would remain subdued ahead of U.S. non-farm payrolls data for June and comments later this week by the European Central Bank and Sweden's Riksbank after their respective monetary policy meetings.

"Euro/dollar has been stuck in a range between $1.3890 and $1.42 for some time," said George Davis, chief technical analyst at RBC Capital in Toronto. "We would need real market-moving news to see the pair breaking out of that pattern."

The market will particularly pay close attention to U.S. jobs data for any sign of improvement in the economy's health.

The report is due on Thursday, with U.S. financial markets closed on Friday for the Independence Day holiday. A Reuters poll showed economists expect job losses of 363,000 in June. To top of page

Track 17 major currencies

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Copyright 2009 Reuters All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.