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The Swiss franc and Japanese yen weakened on optimism the global economic recovery can withstand the effects of Europe’s sovereign-debt crisis and Japan’s worst earthquake on record.
“If we don’t see a significant deterioration of events in Japan, then dollar-yen could try and push higher into next week,” said Jeremy Stretch, executive director of foreign- exchange strategy at Canadian Imperial Bank of Commerce in London. “We are still in a state of relative crisis in the euro zone. There’s a little bit of selling pressure on the euro.”
The euro slipped from near its highest in more than a year against the dollar as European Union leaders prepare to conclude a two-day meeting on the crisis. Portugal, which reiterated its opposition to a financial bailout, had its credit rating lowered yesterday by Standard & Poor’s.
German business confidence fell less than economists forecast in March, a report showed today, suggesting Japan’s earthquake and the prospect of higher euro-region borrowing costs may not damp growth in Europe’s largest economy.
The Munich-based Ifo institute said its business climate index, based on a survey of 7,000 executives, declined to 111.1 from 111.3 in February, which was the highest reading since records for a reunified Germany began in 1991.
The euro headed for a 0.2 percent weekly drop against the dollar. European Union leaders cut the startup capital for the future euro emergency aid mechanism, stoking fresh concerns about Europe’s effort to quell its debt crisis. The leaders pared the fund’s paid-in capital as of 2013 to 16 billion euros ($23 billion), less than the 40 billion euros foreseen in a March 21 accord.
The Australian and New Zealand dollars headed for weekly gains.
US data starts at 1230GMT, when fourth quarter GDP is expected to be revised up to a 3.0% rate of growth, while the chain price index is expected to be unrevised at +0.4%. Analysts have already turned their attention to the first quarter of 2011, however.
At 1355GMT, the Michigan Sentiment index is expected to be revised down to a reading of 68.0 in March, still below the 77.5 reading in February.
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