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FOREX-Euro gains traction ahead of inflation data, dollar steadies

       By Tom Westbrook
    SINGAPORE, June 28 (Reuters) - The euro won support on
Tuesday as traders braced for European inflation figures to run
hot this week and awaited a speech from central bank chief
Christine Lagarde, while worries about a recession kept the U.S.
dollar firm.
    The euro rose 0.3% overnight and at one point
poked above its 50-day moving average. It last sat at $1.0578.
    The dollar held modest overnight gains on other currencies
and traded at 135.37 yen and $0.6936 per Australian
dollar early in the Asia session.
    German inflation figures are due on Wednesday, French data
on Thursday and euro zone numbers on Friday. European Central
Bank President Lagarde is also due to speak at the ECB forum in
Sintra, Portugal, at 0800 GMT on Tuesday.
    "This set of inflation data will have a significant
influence on the ECB's monetary policy forward guidance,
especially on the trajectory ... of its interest rate hike cycle
that is expected to kick start in July," said CMC analyst Kelvin
    Hike expectations have the euro trading firmly against the
yen and it last bought 143.28 yen, close to last
week's seven-year high of 144.24. It also has momentum on
sterling and has gained 1.2% this month to 86.15
    The weak spot is against the Swiss franc which has
rocketed to test parity on the common currency following a
surprise rate hike by the Swiss National Bank earlier in June.
    Moves elsewhere were modest as traders try and navigate
between relief that signs of weakness in recent global economic
data can moderate rate hikes, and worry that it could be a
harbinger of the onset of a difficult period of stagflation.
    Some of the heat has come out of bets on U.S. interest rate
rises, with the peak in the Federal Reserve's benchmark funds
rate now seen hovering around 3.5% next year rather than 4% or
above, but the dollar has not yet fallen far from lofty peaks.
    The U.S. dollar index struck a two-decade high of
105.79 this month and was last steady at 103.93.
    The risk-sensitive Australian and New Zealand dollars have
been left behind in last week's stock market bounce. The kiwi
 was steady at $0.6306 on Tuesday.
    Sterling was similarly becalmed at $1.2274.
    "Stay long the dollar until some of the uncertainty has
reduced," said Societe Generale strategist Kit Juckes.
    "The dollar will fall likely only when the global economy is
on a more sustainable growth path ... markets are
forward-looking, but all we can see ahead today is danger."

    Currency bid prices at 0130 GMT
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change
 Euro/Dollar                  $1.0579        $1.0583     +0.00%         -6.91%      +1.0586     +1.0571
 Dollar/Yen                   135.3050       135.4600    -0.12%         +17.63%     +135.5850   +135.3000
 Euro/Yen         Dollar/Swiss                 0.9558         0.9562      -0.07%         +4.75%      +0.9567     +0.9555
 Sterling/Dollar              1.2274         1.2265      +0.07%         -9.24%      +1.2283     +1.2263
 Dollar/Canadian              1.2866         1.2872      -0.05%         +1.76%      +1.2878     +1.2858
 Aussie/Dollar                0.6929         0.6925      +0.09%         -4.65%      +0.6938     +0.6918
 NZ                           0.6300         0.6302      -0.02%         -7.96%      +0.6307     +0.6293

All spots
Tokyo spots
Europe spots
Tokyo Forex market info from BOJ

 (Reporting by Tom Westbrook; Editing by Jacqueline Wong)

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