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Euro rose sharply against the U.S. dollar on Tuesday, extending the benefits as investors felt confident enough to take the more risky assets, dealers said. They said that, despite recent U.S. economic data suggest the recovery is weaker slowing, concerns about the debt crisis of Europe has somewhat subsided, helped by news of the success of the Spanish government bond sales. It is taken as a simple voice confidence in Spain and the euro, support the currency against the dollar after the key services sector slowed more than expected in June.

Institute of Supply Management said its index of non-manufacturers fell to 53.8 points from 55.4 in May, compared with 55 economists forecast. In late London trading, the euro rose to 1.2645 dollars from 1.2538 dollars late in New York on Monday. Against the Japanese currency, the dollar slipped to 87.53 yen from 87.77 yen on Monday. Dealers said the euro also benefited from a stronger stock market but the single currency faces stern test ahead of the “stress test” for European banks to determine their financial soundness. There’s bad news in that area that would weaken investor confidence very quickly and may see euro came under pressure again, with the results of stress tests, banks are expected to be released later this month. Read the rest of this entry »