Dollar Edges Up vs. Euro on U.S. Services Data

The dollar edged up Monday against the euro in European trading, helped by better-than-expected growth in the U.S. services sector.

Dollar and Euro
Dollar and Euro

The 13-nation euro fell to $1.4470 in afternoon European trading, below its all-time high of $1.4528 set last week and the $1.4502 it bought late Friday in New York.

The euro slip came after the Institute for Supply Management's index gauging the health of non-manufacturing industries in the U.S. registered 55.8, up from 54.8 in September.

The result was stronger than the 54 reading analysts had expected. A reading above 50 indicates expansion, while one below 50 shows contraction.

The U.S. currency has been on a roller coaster ride since last week, after the Federal Reserve's decision to cut interest rates by a quarter of a point. It has continued to suffer from market worries about the U.S. economy driven by the subprime mortgage market crisis.

"Concern over further fallout from the subprime lending crisis is still haunting the market and with a number of the big European investment banks due to report over the next few days, any repeat of last week's write-downs at Citigroup could put the dollar under further pressure still," said James Hughes, a market analyst at CMC Markets in London.

On Monday, Joerg Schneider, chief financial officer of Munich Re, the world's second-largest reinsurer by gross premiums, said he does not expect the company's future earnings to be burdened by more exposure to U.S. subprime markets.

"This topic is not an issue for us any more," Schneider told reporters on a conference call after the company announced its third-quarter results.

Munich Re booked 115 million euros ($166.51 million) in impairments on financial instruments exposed to the U.S subprime market in the third quarter and 150 million euros ($217.18 million) in the first nine months.

In addition, the euro has been helped by sentiment that the European Central Bank, which meets Thursday, has yet to finish a campaign of gradual rate increases, while the pound has benefited from expectations that the Bank of England will leave rates unchanged rather than follow the Fed in cutting the cost of borrowing.

The British pound fell to $2.0802 from $2.0890 in New York late Friday.

The dollar edged up to 114.46 Japanese yen compared to 114.69 yen late Friday in New York.