Euro on the rise as strong data helps bloc

The euro rose off a seven-week low yesterday as talk of the US Federal Reserve extending the lifespan of its stimulus programme and some robust data offset expectations of more European Central Bank easing in coming months.

With uncertainty high over what steps the ECB might hint at after its meeting today, investors focused on fresh eurozone data as solid services PMIs and a surge in German factory orders offset some weaker retail figures.

The services report pointed to a continued gradual recovery in the 17-country eurozone but one that remains painfully slow in many parts of the bloc.

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European shares had already inched to a new five-year high by the time the data came out.

A batch of better-than-expected results provided the leg up, including from world No. 1 jobs agency Adecco, which flagged increasing demand in Europe.

“For the next couple of days we have such a heavy events schedule, with the ECB and then US payrolls on Friday, that I think we are looking at the market battening down the hatches,” said Ned Rumpeltin, head of G10 FX strategy at Standard Chartered.

The dollar, meanwhile, pared its recent gains against a basket of major currencies and dipped 0.3 per cent, even while it edged up on the Japanese yen to 98.60.

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Comments from Fed policymaker John Williams, who said the central bank should wait for stronger evidence of growth momentum before trimming bond-buying, helped balance out a surprisingly strong US service sector report.

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