Euro gains on short-covering

2010-12-28 09:41

Tokyo - The euro gained ground on short-covering in quiet Asian trading on Tuesday, with investors' eyes on key US economic data due to be released later in the day, dealers said.

The euro rose to $1.3226 in Tokyo morning trade from $1.3161 in New York late on Monday. The European single currency was also up at ¥109.35 from ¥109.00. The dollar edged down to ¥82.67 from ¥82.78.

The euro was up on short-covering after players failed to break below the euro's recent low of ¥108.33 marked on November 30, Kenichiro Ikezawa, a fund manager at Daiwa SB Investments, told Dow Jones Newswires.

The market shrugged off major Japanese economic indicators released earlier in the day, dealers said.

The data showed that industrial output rose 1% in November from the previous month, rebounding after five straight months of declines.

The core consumer price index fell 0.5% in November from a year ago, marking the 21st consecutive drop, showing that Japan remains mired in deflation.

Thin market conditions are expected to continue as investors are away for holidays in many overseas markets on Tuesday, dealers said.

The market is focused on the US consumer confidence index due later in the day, as the dollar may rise versus the yen in the near term if investors gain increasing confidence that the US economic recovery is solid, said Teppei Ino, senior analyst at Bank of Tokyo-Mitsubishi UFJ.