LONDON, Sept 15 - The euro pulled back from Friday's four-week peak against the dollar on Monday as traders assessed the implications of a "no" vote in Sweden's euro referendum and waited for a raft of U.S. data. Swedes voted a resounding "no" to the euro in Sunday's referendum, defying expectations of a late surge of sympathy votes for the pro-euro movement after the murder of Foreign Minister Anna Lindh. The result sent the Swedish currency sharply lower at the opening and raised doubts whether the euro could retain its recent upside momentum. But the crown had largely recovered its losses by the European midsession as the focus shifted to U.S. economic indicators.
"The euro and the Swedish crown both initially fell on the Swedish referendum result, but I don't think it will be a long-term factor," said Steve Pearson, head of currency strategy at HBOS Treasury Services. "The focus will soon shift back to economic fundamentals." The euro shuttled in a narrow range around $1.1270 , down half a cent from four-week peaks scaled on Friday in the wake of disappointing U.S. retail sales and consumer confidence data. U.S. current account, industrial production and regional manufacturing figures are due later in the day and will be closely watched ahead of Tuesday's Federal Reserve interest rate decision.
DATA WATCH
With real money investors more concerned with gathering evidence on the pace of a global recovery, analysts said Sweden's rejection of euro entry -- by a wider than expected margin of 56-42 percent -- would not remain a focus for the euro for long. "It's a factor capping the recent rise in the euro," said Ryan Shea, senior international economist at Bank One in London. "It's not an overwhelming endorsement of your region's policies if Sweden doesn't want to join." U.S. current account deficit data is due at 1230 GMT and forecast to show a deficit of $138 billion in the second quarter compared with $136 billion in the first three months of the year. The New York Federal Reserve releases its September Empire State Manufacturing Survey at 1230 GMT, ahead of August industrial production and capacity utilisation data at 1315 GMT.
"The market is already expecting some pretty good numbers so the issue is how much can the data deliver up positive surprises when people are already expecting positive results," said Mitul Kotecha, head of currency research at Credit Agricole Indosuez in London. The dollar held a firm footing at 117.60 yen with a holiday in Tokyo creating subdued trading conditions. Japan's policy of intervening to stem export-damaging gains in the yen was criticized by European officials at the weekend. European Union finance ministers and central bank governors meeting in northern Italy said Asia's weak currencies were causing problems for the euro and urged China and Japan to share the pain of unwinding the enormous U.S. current account deficit.//