Euro gains on German business sentiment

The euro was stronger on Tuesday on new data that tended to reinforce the expectation that eurozone interest rates will be raised again. The probability that the European Central Bank will send rates higher in May has been estimated at anywhere from 50 percent to 90 percent, and some analysts even suspect that a hike might come in April. Among the data adding credence to these predictions are a higher Ifo business sentiment index out of Germany that put sentiment at a 15-year high in March. Additionally, the eurozonea��s M3 broad money supply was up to 8 percent in February, from 7.6 in January.

At mid-day in New York, the euro had gained 0.5 percent to $1.2070 versus the US dollar. The shared currency was up by 0.9 percent to A?141.50 in relation to the Japanese yen, and it rose 0.4 percent to A?0.6902 against sterling.

Elsewhere, the Swiss franc was up to SFr1.5706 to the euro in European trade, after having hit a two-year low at SFr1.5783 just last Friday. One of the most popular theories concerning the recent losses for the Swiss franc have to do with it replacing the yen as the choice currency to fund carry trades.

In emerging market currencies, the Brazilian real lost 2 percent to take it to R$2.2231 to the US dollar on concerns that the new finance minister there will loosen monetary policy in the South American nation. The real has lost 3 percent to the dollar so far this week. Meanwhile, the Mexican peso dropped 0.3 percent to the greenback to a ten-month low of 10.9805 pesos to the dollar. This new loss takes the peso down 4.9 percent versus the dollar for the month.

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