Euro rises as investor optimism gains
NEW YORK: The dollar traded mostly lower Monday while the euro gained ground with optimism fueling gains in riskier assets as investors moved away from safe-haven flows.
The euro climbed to 1.3558 dollars at 2100 GMT compared with 1.3490 dollars late on Friday.
The dollar rose to 96.31 yen from 95.19 on Friday.
The euro is generally considered a risky bet on currency markets and therefore gains at times when there is greater perceived economic stability, while the dollar and the yen are seen as safe havens in troubled times.
Markets appeared to shake off news from Friday that showed the eurozone economy shrinking a record 2.5 percent in the first quarter, including a 3.8 percent drop for Germany.
Analysts said that despite the weak news from the first quarter, things were looking somewhat brighter for the remainder of 2009 with credit costs falling and confidence rising.
"The gloom of backward-looking data such as GDP (gross domestic product) and employment statistics continues to battle with the early signs of improvement in the less tangible measures of confidence and sentiment," said Daragh Maher, an analyst at French investment bank Calyon.
"The rally in equity markets during March and April may hint that the optimists have won, but the fact that this has now petered out instead suggests that we have merely removed the extreme pessimism from the market."
Andy Douglass at PNC Bank said the market focused on a rise in key commodity prices and surveys showing stronger US consumer confidence,
"Oil and copper are both higher on speculation that a global recovery will increase demand for these commodities," he said.
Douglass noted that positive consumer confidence data from Friday and a strong earnings report from key retailer Lowe's on Monday helped spark optimism in the stock market, prompting currency traders to take notice.
"This uptick in equities is leading to broad dollar weakness as risk aversion decreases and investors buy up overseas currencies," he said.
In late New York trade, the dollar stood at 1.1141 Swiss francs from 1.1211 Friday.
The pound fetched 1.5344 dollars after 1.5176.