Euro bounces to parity as Dow slide continues

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The Independent Online

The Euro hit parity with the dollar for the first time in a month yesterday on renewed optimism that Europe's economy and stock markets are set for a strong rebound. The currency rose by more than 2 per cent - its steepest rise this year - to $1.0075.

The Euro hit parity with the dollar for the first time in a month yesterday on renewed optimism that Europe's economy and stock markets are set for a strong rebound. The currency rose by more than 2 per cent - its steepest rise this year - to $1.0075.

Analysts said the euro benefited from another fall on Wall Street. US equities - sold off on Friday before a holiday long weekend - slid again in early trade yesterday, with the Dow Jones down 0.8 per cent and the Nasdaq tumbling nearly 2 per cent. "You need the US to start to lose its shine to help the European fundamentals come through," said Alison Cottrell, international economist at PaineWebber.

Kenneth Bercuson, currency strategist at Donaldson Lufkin & Jenrette, said: "From a fundamental point of view, Europe seems to be a much better place to put your money than the US."

German business confidence in January was at its highest in more than two years. At the same time, Europe's central bankers have been increasingly hawkish on euroland interest rates, now 3.5 per cent compared with 6 per cent in the US.

Gordon Brown, the Chancellor, said yesterday he would release an updated assessment within weeks on the UK joining the euro. Business for Sterling, the anti-euro group, accused the Chancellor of misrepresenting the arguments on the UK's place in Europe; it said Mr Brown claimed that 750,000 firms "had links" with the EU, when only 100,000 companies actually export to the Continent.

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