Euro holds at 8-week high against the US dollar

London

THE euro held at an eight-week high against the US dollar on Monday despite a disappointing sentiment survey in Germany as expectations that the US Federal Reserve will maintain its dovish stance at a policy meeting weighed on the greenback.

German business morale improved by less than expected in April as a third wave of Covid-19 infections and problems with supply of components in the industrial sector seemed to slow the recovery in Europe's largest economy.

Analysts, however, kept focusing on the general direction of travel of the economy, seen firmly on its way out of the Covid-19 crisis.

"Notwithstanding the slight disappointment in today's figures, the April Ifo results combine with other closely-watched surveys for the euro zone economy... in signalling momentum improvement at the start of Q2," said economist Ricardo Amaro of Oxford Economics.

On April 23, the common currency posted its biggest daily gains since early February after positive data on European services and manufacturing activity lifted sentiment.

Adding to the optimism, a source told Reuters that the German government has raised its growth forecast for this year to 3.5 per cent, compared with the 3 per cent growth it was expecting back in January.

The euro had given up the morning's gains by around midday on the continent, to stand 0.01 per cent lower at US$1.2095, clinging to its highest levels since the beginning of March.

The dollar index was down 0.11 per cent at 90.80, its lowest level since March 3.

The Fed's next meeting ends on Wednesday, and while no major policy changes are expected, investors will pay close attention to comments from chairman Jerome Powell.

The dollar stood at 107.77 yen, close to its lowest since March 4.

The British pound was 0.1 per cent higher at US$1.3894, adding to a 0.3 per cent gain in the previous session.

In emerging markets, the Turkish lira weakened to as much as 8.48 versus the dollar, close to its record low of 8.58 reached in early November.

The onshore yuan edged up to 6.4841 per dollar, just shy of a six-week high.

Elsewhere, the Australian and New Zealand dollars rose toward one-month highs.

In the cryptocurrency market, Bitcoin reclaimed the US$50,000 mark. REUTERS.