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The dollar advanced from a two-month low against the euro before U.S. data this week that economists said will show a growing economy and increasing consumer confidence.
The euro weakened against the dollar for the first day in five. Irish political leaders said they’ll press to pass a budget before elections after the Green Party left Prime Minister Brian Cowen’s coalition. Passing the plan is a condition of Ireland’s 85 billion-euro ($115 billion) aid package from the International Monetary Fund and the European Union.
The single currency is likely to continue “an unwind of what was extremely strong euro pricing last week, particularly given the Irish news,” said Geoff Kendrick, head of European foreign-exchange strategy at Nomura International Plc in London.
The pound snapped two weeks of gains against the greenback before tomorrow’s growth report amid waning speculation that the Bank of England will raise interest rates this year. U.K. gross domestic product likely rose 0.5 percent in the fourth quarter, compared with a 0.7 percent increase in the third quarter, according to a Bloomberg News survey.
“The markets are a bit premature in expecting the Bank of England to hike rates anytime in the next few months,” said Mitul Kotecha, Hong Kong-based head of global foreign-exchange strategy at Credit Agricole CIB, said. “That might just see a little more downside risk to sterling.”
EUR/USD: eased to $1.3540, before bounced back to $1.3570. Offers: $1.3575/80, $1.3600/05, $1.3620/25, $1.3650. Bids: $1.3535/25, $1.3510/00, $1.3485/80.
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