Euro rises in London

The euro rose on Wednesday as firmer European equities helped lift risk appetite, pushing the single currency higher, while dollar direction will take its cue when US markets reopen. Traders said demand from Middle Eastern and Asian sovereign investors and a supranational also buoyed the euro, which was up 0.4 percent at $1.3009.
"Today it is sentiment driving the euro up and stock markets are slightly positive, which has pushed it higher," said Antje Praefcke, currency strategist at Commerzbank in Frankfurt. She added that trade was quiet before a holiday in many European countries on Thursday. Traders also said the euro's gains against the dollar may be limited due to expected month-end demand to buy dollars.
Investors are now looking to the open in US markets following two days of closure as storm Sandy hit the US East Cost for indications of the dollar's direction. "The market is waiting to see how the US market opens after Sandy. Equity futures are higher so people are expecting a positive opening," said Arne Lohmann Rasmussen, head of currency research at Danske Bank in Copenhagen.
"Over the next few months we think euro/dollar will break higher. We believe the market is underestimating the effect of the Fed's open-ended easing policy and tail risks will be priced out of the euro once Spain applies for a bailout." Gains in the euro have been capped in recent weeks due to uncertainty of when Spain may ask for a bailout and whether labour reforms in Greece will unlock its next aid tranche from the IMF, EU and ECB Troika.
This has kept it in a range between $1.2800 and $1.3200 since mid-September. The Norwegian crown rose against the euro after the country's oil fund said it held back from selling crowns in November after buying 500 million in October, stronger retail sales and better-than-expected credit figures. The euro fell to 7.3860 crowns, a one week low against the single currency. Investors will look to a rate decision from the Norwegian Central Bank due at 1300 GMT where it is likely to hold rates.
The euro was also weak against the Swiss Franc, hitting a three week low of 1.2074 francs, with some market players citing increased repatriation flows from deleveraging by Swiss Bank UBS, which cut 10,000 jobs this week. The dollar was up 0.2 percent at 79.77 yen, recovering from a fall to 79.28 yen on Tuesday, with improved risk appetite weighing on the safe-haven Japanese currency. The euro rose 0.5 percent to 103.67 yen, off Tuesday's two-week low of 102.175 yen.