| GEO Business|
Euro surges; China, no Basel surprises, lift mood
| Updated at: 1127 PST, Monday, September 13, 2010|
TOKYO: The euro surged on Monday as positive market sentiment following upbeat Chinese data and a lack of surprises from new banking rules tripped automatic buy orders and sent it nearly 1 percent up on the dollar.
The upbeat economic numbers out of China also propelled the Australian dollar to its highest in four months against the greenback, as share markets around the region rose on positive risk sentiment, and the low-yielding yen retreated.
Automatic buy orders triggered at around $1.2720/30 and $1.2750/70 helped extend the euro's rally, with talk of buying by a commodity trading adviser also said to have helped the rise. But it later faltered at $1.2800 EUR=.
Analysts said the positive sentiment for the euro could last for a bit but they wanted to see how European financial shares and credit markets responded.
"The introduction of the new Basel rules will be years away, so the market's focus will soon shift back to more immediate factors, such as euro zone debt auctions and suspicions on the EU stress test," said Keiji Matsumoto, strategist at Nikko Cordial Securities.
The euro has been in a downtrend against the dollar all year on concerns about sovereign debt and the European banking system. It corrected from a four-year low below $1.19 set in June and is now holding above its 100-day moving average at $1.2652 which has tended to act as a trendline.
It rose 0.9 percent to $1.2791 EUR=, its strongest levels in about a week, and gained 0.8 percent to 107.60 yen EURJPY=R.
New Basel rules agreed on Sunday will require banks to hold top-quality capital totalling 7 percent of their risk-bearing assets, which is up from 2 percent under current rules.
The regulations give banks longer than expected to comply and Germany won a key concession for its savings and cooperative banks - both factors supporting markets.
Data at the weekend showed Chinese factories ramped up production in August and money growth topped expectations, indicating the economy remained buoyant despite government efforts to clamp down on bank lending and property speculation.