American focus: euro rose

The euro rose against the dollar for the first time in three days as a purchasing managers’ index of manufacturing output in the region beat analysts’ estimates, adding to signs Europe’s economy is stabilizing. The euro reversed an earlier decline after Markit Economics said its manufacturing gauge based on a survey of purchasing managers in the euro region rose to 48.8 in January from 46.9 in December. In Germany, the output gauge reached the highest in six months. The euro appreciated 1 percent against the dollar last month as Italian and Spanish bonds outperformed their German counterparts amid speculation policy makers are bringing the region’s debt crisis under control. European economic confidence increased in January and German unemployment dropped more than economists estimated from the previous month. In discussions late last week in Athens, bondholders negotiating a debt swap with Greece lowered their demands for an average coupon on the new 30-year securities they would receive to as little as 3.6 percent from 4.25 percent after European officials demanded they take steeper losses, people familiar with the matter said at the time.

The greenback fell versus 14 of its 16 most-traded peers after manufacturing in China and the U.S. also rose, damping demand for safer assets. The official Chinese purchasing managers’ index increased to 50.5 from 50.3 in December, though the data may have been distorted by a weeklong holiday. U.S. manufacturing expanded at the fastest pace since June. The Institute for Supply Management’s manufacturing index rose to 54.1 in January from 53.1 in December, the group said today. Companies in the U.S. added 170,000 workers in January, reflecting job gains in services and at small businesses, according to a private report based on payrolls.

The yen appreciated for a fifth day against its U.S. counterpart, adding to speculation Japan’s central bank may sell the currency to stem its appreciation.

Switzerland’s franc climbed to a four-month high against the euro, approaching the Swiss National Bank’s ceiling.