Dollar-euro rate flat as stock markets soar

File photo shows a currency exchange worker holding a handful of euro notes.
(AFP/File - Leon Neal)

NEW YORK: The US dollar-euro rate was flat while the yen edged higher Tuesday in fairly calm forex trade, with the euro holding up on the back of an unexpectedly strong report on German industrial orders.

At 2200 GMT the euro was at US$1.3077, compared to US$1.0374 late Monday. Both the US dollar and the euro were being helped by strong investment inflows into securities on both sides of the Atlantic, amid improved investor confidence in the global economy.

The yen meanwhile picked up against the two currencies as Tokyo stocks soared 3.6 per cent to their best level in nearly five years.

The US dollar was at 98.96 yen from 99.31 yen, while the euro bought 129.41 yen, down from 129.87.

The euro surged briefly during the day after data showed German industrial orders rose unexpectedly strongly in March, by 2.2 per cent, propelled by rising demand -- both at home and abroad -- for German-made goods.

David Song of DailyFX tied the pullback from the early gains to still-prevailing expectations that the European Central Bank is leaning toward more monetary easing.

"The central bank may show a greater willingness to implement negative interest rates in the euro-area as the region struggles to return to growth," he said.

The British pound gave up ground against the greenback for the second straight day, ahead of the Bank of England monetary policy meeting on Wednesday and Thursday.

The pound was at US$1.5484, down from US$1.5539 late Monday.

Song expected the meeting to leave current policy unchanged, as the British economy turns back to growth.

"We should see the sterling maintain the upward trend dating back to March as the central bank appears to be slowly moving away from its easing cycle," he said.

The US dollar rose to 0.9406 Swiss franc from 0.9382 franc.