By Tommy Stubbington and Josie Cox
The dollar rebounded against the euro Tuesday, after several
sessions of losses, underscoring that many investors still deem the
case for buying the buck intact ahead of an expected rise in U.S.
interest rates, possibly as early as later this year.
The U.S. currency was 0.3% higher against the euro in late
European trade, having fallen for several consecutive days after
the Federal Reserve last week indicated it may not be ready to
raise interest rates as soon as some investors had expected.
Underpinning the greenback were figures showing that U.S. consumer
prices had increased for the first time since October and had made
their biggest gain since June.
The euro remains some way off its 12-year low of under $1.05
reached earlier this month after the European Central Bank launched
its massive bond-buying program, but some strategists are still
adamant that it will return to those levels and even head to parity
against the dollar later this year, especially if a strong run of
U.S. economic data materializes.
"We remain fundamentally bullish on the dollar and would look to
use the [recent] consolidation as an occasion to add dollar longs
at better levels," strategists at Credit Suisse wrote in a note,
adding that they see the greenback as particularly attractive
against the euro. One euro bought $1.0915 in recent trade.
Earlier in the day, the euro had traded higher against the
dollar, with analysts saying that an improvement in the eurozone
economy could at some point cast doubt on the future of the ECB's
quantitative easing program.
On Monday, however, ECB President Mario Draghi firmly underlined
that QE would continued until September 2016.
Elsewhere in European currency markets the Swiss franc also rose
against the euro Tuesday, hitting its highest level since early
February, with no immediately obvious trigger.
The franc has had a turbulent ride since January, when the
country's central bank ended a 3 1/2 year policy of capping the
strength of the franc at 1.20 to the euro. The franc soared after
the decision, forcing many Swiss exporters to cut pay and move work
abroad to stay profitable.
In equity markets Tuesday, European stocks rose after swinging
between small losses and slim gains during the first half of the
session.
The Stoxx Europe 600 added 0.3% on the day, after Monday's 0.7%
loss. A weaker currency is generally seen as good news for European
companies, which earn a big chunk of their revenue abroad, but have
most of their costs in their home market.
Germany's DAX index added 0.9%, while France's CAC 40 rose 0.7%.
Outside the eurozone, the U.K.'s FTSE 100 slipped 0.2% on the
day.
In commodities markets, Brent crude oil slipped 0.7% to $55.50 a
barrel, while gold slipped 0.2% higher at $1,190.10 an ounce.
Write to Tommy Stubbington at tommy.stubbington@wsj.com and
Josie Cox at josie.cox@wsj.com
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