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The euro rose for a third day versus the dollar on speculation a meeting tomorrow between French President Nicolas Sarkozy and German Chancellor Angela Merkel in Paris may result in action to contain the region’s debt crisis.
The Swiss franc tumbled against the euro, headed for its biggest three-day decline since the European currency’s 1999 debut on speculation Switzerland will take further action to counter recent gains.
The franc slid for a fourth day versus the dollar after the SonntagsZeitung newspaper said the Swiss government and central bank are in “intense” talks over setting a target for their currency. The yen dropped the most in a week against the euro after Japan indicated it’s ready to intervene in foreign- exchange markets again.
“Market participants look like they are avoiding the franc and the yen, but they cannot take risks infinitely,” said Mamoru Arai, a senior currency trader at Mizuho Financial Group Inc. in New York. “For this week or so, they may choose that over the risk of intervention. We cannot predict what will be, but everybody is concerned over some kind of action.”
Manufacturing in the New York region shrank for a third month in August. The Federal Reserve Bank of New York’s general economic index fell to minus 7.7, a report showed today. The median forecast was for a reading of zero, the dividing line between expansion and contraction.
“We’re now recovering risk appetite,” said Sebastien Galy, a senior foreign-exchange strategist at Societe Generale SA in London. “The market knows it’s going to be negatively surprised, but it couldn’t care less at this point in time.”
In June, global demand for U.S. stocks, bonds and other financial assets weakened as the White House and Congress wrangled over raising the debt limit, government figures show. Net buying of long-term equities, notes and bonds totaled $3.7 billion, compared with net buying of $24.2 billion in May, according to Treasury Department data issued today.
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