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Euro recovers versus dollar after IMF head arrest

Euro recovers versus dollar after IMF head arrest

The euro recovered from early declines Monday following the weekend arrest of the head of the International Monetary Fund, thanks to a pair of economic reports.
Consumer-price growth in the 17-county eurozone was 2.8 percent in April, up from 2.7 percent in March. The results mean that the European Central Bank is likely on track to raise interest rates this summer as was expected, said Camilla Sutton, chief currency strategist at Scotia Capital.
Meanwhile in the U.S., an index that is used to gauge manufacturing business conditions in New York State fell to its lowest level in five months. The New York Federal Reserve's Empire State Index fell to 11.88 in May from 21.70 in April.
The euro rose to $1.4206 Monday afternoon in New York from $1.4168 Friday.
The euro had fallen as low as $1.4046 earlier after IMF chief Dominique Strauss-Kahn was arrested on charges that he sexually assaulted a hotel maid in New York.
Investors had worried that his arrest could slow any plans to help Europe's debt crisis. However, concern eased after the IMF released a statement saying the organization is still fully functional.
European finance ministers met Monday without Strauss-Kahn, who was heading back from the U.S. to attend when he was arrested at the airport. At the meeting, ministers signed off on 78 billion euro ($110 billion) in rescue loans for Portugal. Also discussed was whether more aid would be needed for Greece, which already received a hefty bailout last year.
"Strauss Kahn's fate is unlikely to alter IMF policy inside the eurozone," UBS analyst Gareth Berry said in a note to clients. "Greece and Ireland have made agreements with the IMF as an institution rather than with its head."
In the U.S., a survey of homebuilders showed that they're concerned the housing market won't recover this year. Builders' outlook in May was unchanged at 16, according to the National Association of Home Builders. Any reading below 50 indicates negative sentiment about the market.
In other trading Monday, the dollar was mixed against other currencies around the world. The British pound rose to $1.6219 from $1.6174 Friday. The dollar fell to 80.76 Japanese yen from 80.84 Japanese yen and fell to 0.8830 Swiss franc from 0.8923 Swiss franc. Meanwhile, the dollar rose to 97.30 Canadian cents from 96.82 Canadian cents.
Elsewhere, the dollar was stronger against currencies in New Zealand and Hong Kong, but weaker against those in Australia, Norway and South Korea.