Euro Trades Near 3-Week High After German Unemployment Declines

By Anna Rascouet and Ron Harui

Sept. 1 (Bloomberg) -- The euro traded near a three-week high against the dollar after a report showed that German unemployment unexpectedly fell in August, adding to signs that the 16-nation currency region is emerging from the recession.

The euro gained versus the pound and the Australian dollar as Germany’s Federal Labor Agency said the number of jobless fell by 1,000 to 3.46 million on an adjusted basis. Retail sales in Europe’s largest economy increased for the first time in three months, a separate report showed. The yen fell against 11 of 16 major currencies after a Chinese report showed manufacturing expanded at the fastest pace in 16 months, spurring demand for emerging-market assets.

“The data is providing the euro with some support,” said Michael Klawitter, a currency strategist in Frankfurt at Commerzbank AG, Germany’s second-biggest lender. “There seems to be some risk appetite.”

Europe’s currency rose to $1.4345 as of 9:39 a.m. in London from $1.4334 in New York yesterday. It touched $1.4406 on Aug. 27, the strongest level since Aug. 7. The euro climbed to 133.62 yen, from 133.48 yen. The dollar was little changed at 93.15 yen.

European Central Bank Governing Council member Ewald Nowotny said yesterday he doesn’t expect a double-dip recession in the euro region as long as policy makers don’t hurry to remove emergency stimulus measures.

Exit Strategy 

“I don’t see a perspective of a W-shaped recession if there’s no premature exit strategy,” Nowotny said in a panel discussion in Alpbach, Austria. “What I see is the danger that we’ll have very low rates of positive growth for some time.”

Retail sales, adjusted for inflation and seasonal swings, rose 0.7 percent in July after a 1.3 percent drop in June, the Federal Statistics Office in Wiesbaden said.

The ECB will keep its main refinancing rate at 1 percent at its Sept. 3 meeting, according to all 58 analysts surveyed by Bloomberg.

Japan’s currency weakened after China’s Federation of Logistics and Purchasing said the official Purchasing Managers’ Index rose to a seasonally adjusted 54 in August from 53.3 in July. A reading above 50 indicates an expansion.

“The data suggest the Chinese economy may be on a positive track,” said Masashi Kurabe, head of currency sales and trading at Bank of Tokyo-Mitsubishi UFJ Ltd. in Hong Kong. “It could be supportive for risk appetite and mildly negative for the yen.” 

The MSCI Asia Pacific Index of regional shares advanced 0.5 percent and the Nikkei 225 Stock Average rose 0.4 percent today.

To contact the reporter on this story: Anna Rascouet in London at arascouet@bloomberg.netRon Harui in Singapore at rharui@bloomberg.net.
Last Updated: September 1, 2009 04:48 EDT