The euro extended its rally Monday, December 4, after a week of impressive gains amid a growing perception that European economic growth is progressing at a faster clip than the United States.
The single European currency stood at $0.8886 in late trading here, up from $0.8791 in New York on Friday.
"It looks like we've started the week where we left off last week," said IDEAglobal.com currency strategist Sean Callow. "It no longer needs a huge event to produce a euro rally, which is just further evidence that the market psychology is changing."
The euro had risen as high as $0.89 in European trade for the first time since central banks came to the currency's rescue by intervening on currency markets on September 22.
"It is the best one-week performance (without intervention) since its launch," Commerzbank currency analyst Nick Parsons said. The euro was launched in January 1999.
The euro has clawed back almost six percent against the dollar in as many trading days, riding on signs that the tide may finally have turned for the ailing currency, analysts said.
And the euro's recovery was not at an end, "because the US (economy) is not going to get better," said Parsons.
The motor driving the single European currency's impressive comeback was a growing concern that the US economy could slow sharply instead of easing to a more gentle pace.
Bank of America economist Jeremy Hawkins said the euro was benefiting from a change of sentiment.
"The market is taking the case that the slowdown in the United States is much more marked than anticipated," he said. As a result investors were looking at euroland data "in a more positive light," he said.
Many investors have had their fingers burned by US share losses in recent weeks. The technology-rich Nasdaq index has lost almost half of its value since its peak in March, sliding almost nine percent last week alone.
As a result, many investors have packed up their dollars and headed for home.
The dollar also fell to 110.94 yen from 111.17 yen Friday and to 1.6980 Swiss francs from 1.7226.
The pound rallied to $1.4522 from $1.4373 on Friday.—(AFP)
© Agence France Presse 2000
© 2000 Mena Report (www.menareport.com)