Euro Rises Toward 9-Month High Versus Dollar on Recovery Signs

Sept. 9 (Bloomberg) -- The euro rose toward a nine-month high against the dollar before a government report forecast to show French industrial production increased for a third month in July, boosting demand for higher-yielding assets.

The dollar dropped against the Australian dollar for a sixth day on expectations Federal Reserve officials will today indicate they plan to refrain from raising interest rates. Dallas Fed President Richard Fisher said last week the U.S. may see “a prolonged period of sluggish economic performance.” The euro advanced against 15 of its 16 major counterparts before a report this week expected to show Japanese consumer confidence rose for an eighth month in August.

“Risk appetite is coming back on the table, supporting the euro,” said Susumu Kato, chief economist in Tokyo at Calyon Securities, the investment banking unit of Credit Agricole SA. “The euro is also benefiting from uncertainty about the U.S. economy. The euro-zone is likely to see a hike in interest rates before the U.S. does.”

The euro traded at $1.4497 at 9:29 a.m. in Tokyo from $1.4478 in New York yesterday, when it reached $1.4535, the highest level since Dec. 18. The dollar was at 92.35 yen from 92.32 yen. The euro climbed to 133.87 yen from 133.67 yen, after earlier reaching 133.98 yen, the highest level since Sept. 1.

The greenback declined to 86.36 cents per Australian dollar from 86.16 yesterday, when it touched 86.58, the lowest since Aug. 29, 2008.

Benchmark interest rates are as low as zero in the U.S. and 3 percent in Australia, making the South Pacific nation’s assets attractive to investors seeking higher returns. The risk in such trades is that currency market moves will erase profits.

‘Inflation Debate’

The euro advanced as economists surveyed by Bloomberg News said the Paris-based statistics office Insee may report factory output in France gained 0.4 percent in July after rising 0.3 percent in June. The data is due tomorrow.

“Global growth indicators remain supportive for risk takers,” analysts led by Hans-Guenter Redeker, London-based global head of currency strategy at BNP Paribas SA, wrote in a research note yesterday. “The dollar will remain under selling pressure.”

The dollar weakened before speeches by Chicago Fed President Charles Evans and Dallas Fed President Richard Fisher today. Evans will speak on “The Great Inflation Debate” in New York and Fisher will speak on “Today’s Economy: New Challenges for Business” in Dallas.

Atlanta Fed President Dennis Lockhart will speak in Jacksonville, Florida, and Fed Vice Chairman Donald Kohn will speak in Washington tomorrow.

The euro advanced against the yen for a fifth day as economists surveyed by Bloomberg News forecast consumer confidence in Japan climbed to 40.2 in August from 39.7 in July, boosting demand for higher-yielding assets. The Cabinet Office is set to release the data on Sept. 11 in Tokyo.