Euro dips in Europe as risk appetite grows

The euro dipped against a broadly stronger dollar on Tuesday, as investors regained some risk appetite and sold the single currency in favour of riskier ones such as the Australian dollar. As global stocks hit a 2 1/2-month high, the euro followed European bond yields lower, falling 0.4 percent at $1.0969. The single currency is increasingly used to fund so-called "carry-trades" in which investors borrow a low-yielding currency and sell it to buy a higher-yielding one.
Traders were eyeing Wednesday's US ADP jobs data clues to Friday's US non-farm payrolls report. Employment is considered critical in the Federal Reserve's deliberations over whether to raise interest rates in December. The dollar index was up 0.3 percent at 97.181. "Clearly the December FOMC (Federal Open Market Committee) meeting is much more in the balance than we thought it was a couple of weeks ago," said RBC Capital Markets's head of currency strategy, Adam Cole.
"Every indicator we get between now and then, including the indicator we get tomorrow on the payrolls, will be seen in that context." The Australian dollar, which is viewed as high-risk among developed world currencies and which is closely linked to the Chinese economy, fell as much as 0.9 percent against the dollar after the Reserve Bank of Australia declined to cut interest rates further.
The Aussie had earlier traded as high as $0.7220 but it fell back to $0.7173, still up 0.4 percent on the day, as the dollar strengthened across the board. Against the euro, it was up 0.7 percent at A$1.5294. "Clearly, the market had been looking for rate cut and the chances of it have fallen as there's only one more meeting left before year-end," said Societe Generale currency strategist Alvin Tan in London.
"Also the Aussie is enjoying a bit of a belated bounce following the recent improvement in risk sentiment, which was held back into the RBA meeting." Elsewhere, in the world of web-based "cryptocurrencies", bitcoin reached an 11-month high of $387.00 on the Bitstamp exchange on Tuesday. It has gained over 80 percent since dipping below $200 in late August.