Date: Friday 28 May 2010The euro was stronger across the board Thursday after the Chinese authorities denied reports it was about to sell chunks of its eurozone bonds.
China’s State Administration of Foreign Exchange (Safe), in charge of the country’s massive foreign exchange reserves, called the FT’s report “groundless”.
“Safe is a responsible long-term investor and, under the principle of maintaining diversified investments, Europe has been and will continue to be one of the major markets for investing China’s exchange reserves,” it said in a statement.
The single currency received further support from equitymarkets
, which continued to bounce back from recent lows. It was within a whisker of $1.24 at one point, up from a recent four-year low.
But one analyst put the euro’s improvement down to a relief rally fuelled by a wave of short covering.
Another, chief currency strategist at RBS Global Banking and Markets, Alan Ruskin, suspects the recent shenanigans in the eurozone will alter China’s behaviour, whatever they say.
"No serious investor can be inured to the chilling events at the euro's periphery and its repercussions for long-term confidence in the single currency,” he wrote.
There was some support for the dollar though after the Labor Department's weekly report showed initial claims for unemployment benefits fell 14,000 to 460,000.
However, much of the enthusiasm evaporated following a downward revision of first-quarter gross domestic product to 3%, below expectations of 3.3% and a first reading of 3.2%.
It was a tough day for the yen, losing value as investors funded a move into riskier currencies by borrowing cheaply in the Japanese currency.
China’s State Administration of Foreign Exchange (Safe), in charge of the country’s massive foreign exchange reserves, called the FT’s report “groundless”.
“Safe is a responsible long-term investor and, under the principle of maintaining diversified investments, Europe has been and will continue to be one of the major markets for investing China’s exchange reserves,” it said in a statement.
The single currency received further support from equity
But one analyst put the euro’s improvement down to a relief rally fuelled by a wave of short covering.
Another, chief currency strategist at RBS Global Banking and Markets, Alan Ruskin, suspects the recent shenanigans in the eurozone will alter China’s behaviour, whatever they say.
"No serious investor can be inured to the chilling events at the euro's periphery and its repercussions for long-term confidence in the single currency,” he wrote.
There was some support for the dollar though after the Labor Department's weekly report showed initial claims for unemployment benefits fell 14,000 to 460,000.
However, much of the enthusiasm evaporated following a downward revision of first-quarter gross domestic product to 3%, below expectations of 3.3% and a first reading of 3.2%.It was a tough day for the yen, losing value as investors funded a move into riskier currencies by borrowing cheaply in the Japanese currency.
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