High-yielders slide in London

High-yielding currencies fell on Tuesday, hit after European shares and oil prices relinquished early gains, while the dollar was being supported as investors pondered whether it could sustain gains from a recent rally. The Australian and New Zealand dollars fell as European stocks fell 0.3 percent, prompting traders to sell currencies seen to be higher-risk versus the dollar and the yen.
But the dollar was supported after US jobs data last week boosted expectations for higher US interest rates by early 2010, and investors awaited a Federal Reserve policy announcement on Wednesday for directional cues for the currency.
Analysts said there were few market-moving events in the European session, and with trading volumes thinning as the summer holiday season gets underway, some said currencies were vulnerable to movements in other markets. "Oil has dropped back from the day's high, that could be a driver, said Peter Frank, currency strategist at Societe Generale in London.
By 1114 GMT, the euro was up 0.2 percent to $1.4169, but stayed close to a one-week low around $1.41 hit on Monday. Traders saw support at the 40-day moving average around $1.4095. The Australian dollar fell 0.2 percent to $0.8355, while the New Zealand dollar slipped 0.7 percent on the day, after US crude oil prices retreated from the day's high of $71.22 per barrel to $70.83, up 0.3 percent on the day.
The yen gained broadly, pushing the Aussie down 0.9 percent to 80.63 yen, off a 10-month high of 82.00 yen on Monday, while the New Zealand dollar fell 1.5 percent to 64.72 yen, also retreating from a 10-month peak at 65.90. The dollar was down 0.6 percent at 96.48 yen, off an eight-week high of 97.79 yen set last week.
The euro hit the day's high against the Swedish crown of 10.33 crowns after ratings firm Standard & Poor's cut sovereign credit ratings for Estonia and Latvia on Monday. Swedish banks are heavily exposed to the Baltic region, which is gripped by deep recession. The dollar has held onto most of its post-payrolls gains, which has prompted some in the market to wonder if the trend to sell the dollar on strong economic data is nearing an end.