Euro, yen stronger on data

Story link: Euro, yen stronger on data

The euro strengthened on Tuesday, helped by a Eurozone gross domestic product that was higher for both the fourth quarter and for 2006 as a whole. In addition the ZEW survey of investor confidence in German seemed to indicate that the economy will pick up after the newness of the increased value added tax, introduced as of January 1, wears off. The new numbers convinced most analysts that the European Central Bank will raise interest rates again in March.

At mid-afternoon in New York the euro had added 0.4 percent to $1.3015 versus the US dollar and had gained 0.7 percent on sterling, to �0.6700. The shared currency did retreat, however, against the yen, falling 0.1 percent to �157.80.

The yen also strengthened versus the greenback, adding 0.5 percent to �121.30 ahead of the release of new GDP data in Japan. Some analysts expect the new figures to be strong enough to convince the Bank of Japan to increase interest rates when it meets next week. Some estimates have the GDP there rising as much as 0.9 percent for the fourth quarter.

The US dollar�s declines on the day were blamed on data showing that the nation�s trade deficit grew more than expected in December. Investors were also waiting for US Federal Reserve Chairman Ben Bernanke to testify before Congress. The Canadian dollar, meanwhile, added 0.6 percent to C$1.1680 versus the greenback when Canada showed a trade surplus of C$5 billion in December.