The dollar fell from a five-month high against the euro yesterday after an unexpected rise in a German business survey overshadowed dollar-supportive expectations for higher US interest rates.
A survey by Germany's Ifo Institute showed business morale in Europe's biggest economy unexpectedly rose in April, helped by recovering confidence among retailers and manufacturers.
But the survey also showed that companies' expectations for the future fell this month to the lowest level since August 2003.
"This suggests the European Central Bank is much less likely to consider easing in the near term. Both those reports suggest some changes in interest-rate expectations, which are beginning to be taken notice of in the market," said Mr Robert Sinche, global head of foreign exchange strategy at Citigroup in New York.
Sterling gained strongly against the dollar, surging nearly two cents in value supported by comments from a Bank of England official pointing to higher interest rates.
The euro fell to $1.1764, its lowest point since late November before the Ifo data helped spark a short-covering rally to $1.1865, a gain of 0.18 per cent on the day. - (Reuters)
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