Ketua simpanan persekutuan, FED, kenyataan Ben Bernanke kepada Kongres menyebabkan pasaran turun naik tidak tentu hala semalam. Komen Bernanke pada mulanya mempunyai kesan yang positif terhadap pasaran saham apabila dia menyatakan bahawa akan mempunyai akibat yang tidak dijangka untuk ekonomi AS jika program pembelian bon FED ditamatkan dalam masa terdekat ini.
Program pembelian bon telah meningkatkan pasaran AS dan saham dunia, tetapi setakat ini telah gagal untuk mewujudkan pekerjaan baru. Fed terlebih dahulu menyatakan bahawa membeli bon USD 800 bilion kolar akan berakhir apabila pengangguran telah mencapai 6.5 %. Ia sekarang berada di 7.6 %. Kenyataan ini pada mulanya dilihat oleh pasaran sebagai satu kesinambungan membeli bon yang telah meningkatkan pasaran ekuiti global.
Pada masa yang sama Bernanke menunjukkan bahawa penamatan pembelian bon mungkin segera. Komen-komen ini telah disokong oleh minit mesyuarat perasmian lembaga FED dari April/May untuk penamatan pembelian bon dalam masa terdekat ini. Ini mengakibatkan jatuh melampau pada indeks saham AS. Dow Jones jatuh dari 16 464 jatuh kepada 15 307 dengan menyamai di S&P and Nasdaq.
USD melompat kepada 103,73 Yen bagi satu Dollar. DXY, sebuah bakul mata wang terhadap USD, dinaikkan kepada rekod tinggi 84,27, Euro/USD melompat kepada 1.2854 apabila Franc Switzerland melemahkan Dollar dan Euro. Dolar Australia berniaga di paras terendahnya dalam setahun. Logam berharga telah turun naik tidak tentu hala dalam sesi New York dengan dagangan emas antara USD 1369 dan 1416. Perak mencapai USD 23,20 berundur kepada 22,27. Harga minyak kekal stabil.
Kenyataan Bernanke merangsangkan pasaran saham dunia. Dow Jones segera meningkat kepada rekod tinggi 15 464 dengan kenaikan sama pada ekuiti Eropah.
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Maklumat ini ialah pandangan modal dan pasaran FX. Bahan yang disampaikan dan maklumat yang terkandung adalah penyelidikan pelaburan dan tiada cara untuk harus mempertimbangkan sebagai peruntukan nasihat pelaburan untuk tujuan-tujuan Investment Firms Law 144(I)/2007 Republic of Cyprus atau apa-apa bentuk nasihat peribadi lain, yang berkaitan dengan bentuk urus niaga tertentu dengan jenis tertentu instrumen kewangan.
Pasaran global yang didagangkan berterusan semalam makin meningkat dengan penerbitan minit Rizab Persekutuan dari mesyuarat BOD terakhir pada April/Mei, dan kenyataan Ben Bernanke kepada Kongres kemudiannya hari ini. Setelah pembetulan kecil pada Selasa, USD terus mengukuh dan naik menghampiri rekod tinggi terhadap semua mata wang, DXY.
Terbukti seperti beberapa minggu lepas, trend keseluruhan di USD menjelaskan ke arah semua pasangan mata wang meskipun sehari dua kemerosotan. Aliran ini disokong oleh tiga faktor utama; ramalan untuk AS lebih baik daripada mana-mana ekonomi lain, Eropah dengan kemelesetannya dan Jepun menumpukan usaha-usahanya dalam menambahkan inflasi kepada sasaran 2%.
Lambungan di ekonomi AS sebahagian besarnya disebabkan mengurangkan kewangan dan dasar kewangan longgar FED. Wakil FED, beberapa hari lepas, menunjukkan bahawa program pembelian bon akan berakhir. Jika Bernanke "terbersin" hari ini dan menyatakan sama seperti wakil-wakil FED tempatan yang telah buat, ia bermakna USD berterusan mengukuh.
Euro dan Yen lebih lemah selama beberapa jam nampaknya menunjukkan bahawa apa yang dijangka oleh pasaran. Setelah menteri Economy Jepun bercakap Yen naik terdahulu dalam minggu, dia kelihatan telah ditegur oleh pihak atasan, dan Yen terus jatuh bebas. Tabung Kewangan Antarabangsa, IMF, di laporan hari ini, menyeru pihak berkuasa Swiss melemahkan Franc dengan melegakan rizab dana matawangnya. Franc telah pun menyusut 3,7 % ke arah Euro pada 2013.
Logam berharga berterusan turun naik, tidak tentu hala mencari arah. Peningkatan besar dalam emas dan perak seluruh Asia dan awal perdagangan Eropah dengan cepat dilumpuhkan oleh kejatuhan baru. Harga minyak terus mantap. Inflasi Inggeris lebih kecil daripada yang dijangkakan menguatkan GBP dan memberi pasaran harapan kepada dasar kewangan yang kalah, bermakna lebih banyak wang dicetak oleh Bank of England.
Dapatkan pandangan pasaran harian di emel anda dan tingkatkan prestasi aktiviti dagangan anda di https://secure.mayzus.com/partner/pasaran
Maklumat ini ialah pandangan modal dan pasaran FX. Bahan yang disampaikan dan maklumat yang terkandung adalah penyelidikan pelaburan dan tiada cara untuk harus mempertimbangkan sebagai peruntukan nasihat pelaburan untuk tujuan-tujuan Investment Firms Law 144(I)/2007 Republic of Cyprus atau apa-apa bentuk nasihat peribadi lain, yang berkaitan dengan bentuk urus niaga tertentu dengan jenis tertentu instrumen kewangan.
Emas dan Perak melantun semalam setelah diserang di penghujung minggu lalu, dan di Asia pada pagi Isnin. Logam berharga jatuh hampir 5 %. Emas berniaga di USD 1387 satu auns di Asia, 35 dolar naik dari paras rendah 24 jam lalu. Perak berniaga di USD 22,70 melantun dari rendah 21.00 dan mencapai USD 23, di permulaan sesi perdagangan Asia. Komen-komen yang berhati-hati daripada wakil-wakil dari Rizab Persekutuan AS (FED) mengenai perangsang pembelian bon, telah melemahkan USD.
Dalam satu kenyataan pada Isnin, Presiden Rizab Persekutuan di Chicago melaksanakan komen minggu lepas dari satu lagi presiden FED daerah, bahawa program pembelian bon mungkin tamat pada musim luruh jika, ketika itu, FED pasti yang pasaran buruh di tapak yang kukuh. Sebelum ini, FED meletakkan 6,5 % statistik pengangguran sebagai tanda kritikal. Data terakhir yang diterbitkan menunjukkan 7,6 % statistik pengangguran. Dasar mengurangkan kewangan yang agresif sekarang diikuti oleh Jepun, telah memberi peningkatan kuat untuk pasaran saham dunia.
Saham AS tamat mendatar pada Isnin dengan indeks berada dekat paras rekod. Kebimbangan tentang perhentian pada pembelian bon dan pembetulan mempengaruhi pasaran. Saham tenaga dan syarikat-syarikat solar yang terutamanya meluncur naik. Dow Jones dilihat satu ketinggian dalam sehari pada 15 391. S&P mencecah 1 672. Kedua-dua indeks naik 17 % sejak 1hb Januari. Pelabur dipisahkan antara kebimbangan untuk pembetulan kuat disebabkan ketajaman dan panjang perlumbaan, dan mereka takut terlepas perlumbaan seterusnya.
Saham Eropah menyediakan lima tahun baru tinggi untuk sesi keempat berturut-turut pada Isnin, setelah penunjuk positif dari Amerika Syarikat dan Jepun menunjukkan kepada satu peningkatan tinjauan ekonomi global. Saham-saham mewah Eropah (Financial Times Eurofirst 300 indeks) naik satu peratus, yang merupakan peringkat tertinggi dilihat sejak pertengahan 2008. Data sentimen pengguna AS positif mulai Jumaat, peringkat tertinggi dilihat dalam hampir enam tahun, dilihat sebagai menggalakkan lebih daripada biasa. EasyJet and Ryan Air antara yang mendapat keuntungan terbesar.
Yen Jepun berguling semalam selepas ulasan dari Menteri Econominya, mengingatkan bahawa mata wang mungkin cukup lemah. USD/JPY jatuh kepada 102 selepas tinggi pada Jumaat di 103,22, tetapi telah melantun kepada 102,22. Harga minyak stabil. Dagangan mentah Brent di USD 104,83 satu tong. Kenyataan Ben Bernanke, Pengerusi Fed kepada Kongres pada hari Rabu adalah penting buat perkembangan lanjut mata wang dan pasaran ekuiti global.
Dapatkan pandangan pasaran harian di emel anda dan tingkatkan prestasi aktiviti dagangan anda di https://secure.mayzus.com/partner/pasaran
Maklumat ini ialah pandangan modal dan pasaran FX. Bahan yang disampaikan dan maklumat yang terkandung adalah penyelidikan pelaburan dan tiada cara untuk harus mempertimbangkan sebagai peruntukan nasihat pelaburan untuk tujuan-tujuan Investment Firms Law 144(I)/2007 Republic of Cyprus atau apa-apa bentuk nasihat peribadi lain, yang berkaitan dengan bentuk urus niaga tertentu dengan jenis tertentu instrumen kewangan.
Emas dan Perak jatuh pada awal perdagangan Asia. Silver jatuh kepada paras terendah dilihat dalam tahun-tahun jatuh 4,31 % sejak Jumaat pada 1344 jatuh 50 dolar satu auns sejak Jumaat. Logam berharga telah berada di bawah tekanan berterusan beberapa bulan lepas. Emas jatuh 5,5 % minggu lepas dan jatuh bebas pagi ini. Silver, bagaimanapun, terkena paling kuat. Silver berjual di USD 21.35 satu auns, jatuh satu setengah dolar sejak tingginya pada hari Jumaat. https://secure.mayzus.com/partner/Promosi
Terdapat kekeliruan di pasaran logam berharga. Bulls gold menuduh beberapa bank besar dan institusi kewangan sengaja memanipulasi kejatuhan harga emas, membeli balik di peringkat rendah apabila bank-bank pusat agresif mencetak wang akan mencapai pasaran dengan tekanan inflasi. Di keadaan sebegitu, pelabur sekali lagi akan mula membeli emas dan perak sebagai hedge dan tempat berlindung tradisional yang selamat.
Sebab utama kejatuhan harga seperti, bagaimanapun, membuatkan pelabur kewangan mencairkan, atau dengan kuat mengurangkan posisi logam berharga mereka dan menukar menjadi ekuiti. Angka terbaru dari AS Securities and Exchange Commission menunjukkan pembangunan di pertukaran AS SPDR GLD. Statistik juga menunjukkan bahawa John Paulson, pengurus dana simpanan jutawan dan pemilik terbesar saham di dana GLD, mengekalkan posisinya.
Penjualan institusi logam berharga telah dikira oleh pembelian kuat barang kemas dan duit syiling Asia, yang telah menyediakan sokongan bagi emas di tengah-tengah jualan konsisten oleh pelabur institusi. Logam berharga dijual USD 10 lebih tinggi daripada emas kertas. Bagaimanapun, satu soalan berapa lama pembelian fizikal emas boleh berlarutan. Permintaan Cina naik 20 % pada suku pertama dirangsangkan oleh peningkatan 19 dalam barang kemas dan 22 peratus di bar dan duit syiling. Permintaan India turut bertambah. Barclays Banks meramalkan emas purata di USD 1350 di suku kedua 2013. Credit Suisse meramalkan satu kejatuhan dalam harga emas untuk USD 1100 dalam waktu satu tahun.
USD mendaki kembali dan ditutup minggu lalu di tahap terkuatnya dalam masa tiga tahun menentang mata wang lain. Euro/USD didagangkan pada 1,2843 dan USD/Yen 10,64. Dolar Australia dan New Zealand menanggung kerugian lebih berat terhadap USD daripada yang lain. Dolar Australia mencapai tahap yang paling rendah dalam setahun pada hari Jumaat. Euro dan GBP juga di bawah tekanan menurun kuat. Harga minyak stabil dengan Brent didagangkan di USD 104,50 satu tong.
The Euro dipped to a two-month low against the dollar. Euro/USD is trading at 1.2680 after Euro zone leaders and the International Monetary Fund, IMF, yesterday failed to agree on a long-term plan to reduce Greece’s debt. This has further delayed the disbursement of immediate aid to Athens. The Greek government is said to be running out of funds during this month. In an effort to secure new emergency funding the Greek parliament last Thursday approved new extensive austerity measures. On Sunday the Greek parliament adopted a strict austerity budget for 2013 seemingly to no avail.
Uncertainty over as well short-term financing and long term debt reduction has made the Euro tumble. After stabilizing inside a corridor between 1.28 and 1.30 for weeks, the Euro seems again in free fall. There is little chance that the Euro zone will desert Greece, but investors are frustrated by the lack of clarity. With no emergency funding in place, Greece plans to sell treasury bills during this week to refinance a 5 billion Euro issue maturing on Friday. The outcome of this auction is in the blue. Concerns on Greece’s ability to refinance would for sure put the Euro under new pressure. The Euro has been constantly falling since it peaked at 1.3140 in mid-October as the euphoria over the European Central Bank scheme to buy government bonds to help support Spain’s debt burden faded. uwcfx.com
The European ministers agreed yesterday to grant Greece two more years to reach its budget target, but disagreed over who should shoulder the additional 33 billion Euro cost. Both Germany and Finland have to go back to their parliaments for final approval. The dollar index a measure of the dollar against sic major currencies rose to its highest level since early September. Uncertainties on how US lawmakers shall tackle the “fiscal cliff” of spending cuts and higher tax rates may, however, come back and haunt the dollar. With the dollar also under pressure, JPY will again appear as a “safe haven” among currencies. USD/JPY is trading at 79,285.
Oil prices are under new downward pressure. Brent crude is tipping below USD 109 a barrel. New forecasts from The international Energy agency, IEA, is predicting that the United States would pass Saudi Arabia as an oil exporter by 2015 and become a net exporter of energy by 2020. Precious metals fell back yesterday consolidating heavy gains from last week-lows. Gold is at USD 1725 and Silver trades at 32.40.
By demanding higher taxes for the rich as a condition for any budget agreement with the Republicans, President, Barack, Obama, has opened the fiscal battle that is going to dominate the first months of his second term. Strengthened by the elections Obama has invited Republican leaders to a first round of high-stakes negotiations to prevent the fiscal cliff – a mix of $ 600 billion in spending cuts and tax rises that will go into effect next year unless a deal is reached by 31st December. In spite of some more optimistic signals markets seem to have built in prospects for a no-deal. Combined with technical analysis the development points towards a substantial correction in shares and the security markets in the coming months.
Talks to prevent that scenario, which could tip the US into recession and have disastrous effects on the global economy, were put on ice during the election campaign. Sticking to his principle stand that individuals like himself with an annual income of more than $ 500 000, must take their fair share Obama has kept the door open for details in a compromise package that can open for new ideas. A senior Republican Senator voiced Sunday support for the idea that increased tax revenues from wealthier Americans ought to be a part of a compromise to avoid falling over the “fiscal cliff”.
Global markets are watching Washington’s steps with increased worries. The Asian markets continued to fall in today’s morning trade in spite of a smooth Chinese leadership transition and better industrial production, investment figures and retail sales coming out of China for October. The Chinese authorities also seem to have inflation under better control, and the GDP for 2012 seems to end around the predicted 7,6 percent. A shrinkage in the Japanese in last quarter with 0,9 % also weighed in on investor’s sentiment in Asia. The contraction suggested faltering global demand and weaker consumer spending, and might push the world’s third largest economy into mild recession.
The Greek parliament which last Thursday approved new austerity measures, adopted yesterday night a new tough budget for 2013. European Finance ministers are meeting in Brussels to-day to discuss unfreezing of lending to Greece. There is no agreement within the Euro zone on how to make the debt sustainable. It seems, however, that Athens will be given two more years to cut its debt. Greece’s adoption of a new budget has for now stopped the free fall of the Euro. Euro/USD is trading 0,2 % up at 1.2730. USD is gaining against JPY at 79,485, but is weaker towards Australian dollar, the New Zealand KIWI, Swedish and Norwegian krones. Oil prices have stabilized with Brent trading above 109. Gold and silver, the big winners last week, continue slightly up with Gold at 1735 and Silver 32,62.
Sterling weakened yesterday after headline CPI for March came in well below consensus at +4.0% y/y (cons. +4.4%). UK retail sales for March were disappointing, falling by -3.5% y/y (the drop in total sales is the worst since 1995). This is convincing evidence that austerity measures are feeding through into consumer demand. The focus today shifts to the labour sector and jobs figures. ILO unemployment for the three months to February is expected to remain steady at 8.0%. The MPC minutes the coming week will provide further insight on where the debate reached among policy members, but likely the split remains strong with arch dove and arch hawks.
FX price action was relatively subdued during the Asian session, given the lack of news and data flow. New York Fed President Dudley said QE2 is not designed to influence the dollar and the risk of deflation is now "greatly diminished." But until market participants get more clarity on the Fed's next steps, the dollar will be prone to weakness when risk sentiment is positive. It’s safe-haven status could also remain unclear, judging by recent performance vs. the Swiss franc and the yen. Retail sales and the Fed Beige Book are due today.
April 26 (Bloomberg) -- The yen fell against higher- yielding currencies as signs that a worldwide economic recovery is gaining momentum boosted demand for riskier assets.
Japan’s currency dropped against all of its most-active counterparts after a report showed U.K. house prices rose for a ninth straight month and before data forecast to show the U.S. housing market is stabilizing. South Korea’s won strengthened to a 19-month high as global funds pumped more money into the nation’s shares to profit from accelerating economic growth.
“Data across the globe underscore the economy is recovering, which then boosts risk sentiment,” said Koichi Kurose, chief strategist in Tokyo at Resona Bank Ltd., a unit of Japan’s fourth-largest banking group. “Buoyant risk sentiment will encourage investors to sell the yen and re- invest in higher-yielding assets.”
The yen fell to 126.22 per euro as of 11:04 a.m. in Tokyo from 125.73 in New York on April 23. The currency also dropped to 94.31 yen per dollar from 93.97 in New York. It earlier slid to 87.61 yen per Australian dollar, the lowest since September 2008, before trading at 87.57 from 87.19 last week. The euro was little changed at $1.3378.
The won rose for a fifth day against the yen, trading at 11.6968 against the Japanese currency from 11.7998 on April 23. It earlier touched 11.6933, the highest since October 2008.
The Nikkei 225 Stock Average rose 2.1 percent and the MSCI Asia Pacific Index of regional shares advanced 1.2 percent.
Pound Gains
The pound climbed to a 12-week high against the yen after London-based Hometrack Ltd. said the average cost of a home in England and Wales increased 0.2 percent from March to 158,400 pounds ($243,000). The S&P/Case-Shiller home-price index in the U.S. climbed 1.3 percent, the first increase since December 2006, according to a Bloomberg News survey of economists before the data is released tomorrow.
“The recovery of economies around the world, including the U.K., appears to be firm,” said Yuji Saito, director of the foreign-exchange department at Credit Agricole Corporate and Investment Bank in Tokyo. “The pound may be bought.”
The U.K. currency advanced to 145.61 yen from 144.49 yen in New York on April 23, after earlier touching 145.71 yen, the highest level since Jan. 29.
Fed’s Policy
The dollar traded near its strongest in almost three weeks versus the yen on speculation the Federal Reserve will move closer to withdrawing stimulus measures at its April 27-28 meeting amid signs the U.S. economic recovery is intact.
Fed policy makers this week will try to decide how and when to sell mortgage-backed securities and reduce its balance sheet, the Wall Street Journal said on April 23, without saying where it got the information.
“Our economists note there is some potential for a very modest reworking of the key policy guidance language,” Gareth Berry, a currency strategist in Singapore at UBS AG, wrote in a research note today. “We continue to look for further dollar strength as the Fed shows every intention of gradually continuing down the path to policy normalization.”
Futures contracts on the Chicago Board of Trade on April 23 showed a 72 percent chance the Fed will raise its benchmark rate at least a quarter-percentage point by its December meeting, up from 66 percent a day earlier.
The U.S. economy expanded 3.4 percent in the first quarter, a Bloomberg News survey of economists showed before the Commerce Department’s report on April 30.
April 24 (Bloomberg) -- The dollar advanced for the first time in three weeks against the yen on evidence of a global economic recovery including a surge in the U.S. housing market before next week’s Federal Reserve policy meeting.
The euro touched its weakest level in almost a year against the dollar before Greece asked the European Union and the International Monetary Fund yesterday to activate a bailout of as much as 45 billion euros ($60 billion). The yen fell against all of its major counterparts this week as central banks signaled they will begin increasing borrowing costs to contain inflation, encouraging demand for higher-yielding assets.
“There’s lots of good data in the U.S. and globally, and that’s keeping the yen on the back foot,” said Richard Franulovich, a senior currency strategist at Westpac Banking Corp. in New York. “The aid package for Greece is a temporary stop-gap. The combination of strong U.S. numbers, a more upbeat Fed and sovereign concerns in Europe means it’s just a matter of weeks before the euro breaks $1.30.”
The dollar increased 2 percent to 93.97 yen, from 92.17 on April 16. The euro declined 0.9 percent to $1.3384, from $1.3503 last week. It touched $1.3202 yesterday, the lowest level since April 30, 2009. The euro appreciated 1 percent to 125.73 yen, from 124.44 yen.
New Zealand’s dollar gained 3.2 percent to 67.40 yen and Mexico’s peso increased 2.8 percent to 7.72 yen this week on speculation investors will increase carry trades, in which they buy higher-yielding assets with amounts borrowed in nations with low interest rates. Japan’s benchmark of 0.1 percent has made the yen popular for funding such transactions.
Yuan Forwards
Yuan forwards touched a three-month high on April 22, before yesterday’s meeting of Group of 20 finance chiefs in Washington. The officials called in a statement for “credible” plans to withdraw economic stimulus as the recovery gains momentum and Greece’s fiscal turmoil highlights the risks posed by mounting government debt.
Treasury Secretary Timothy F. Geithner earlier this month called the talks an “avenue for advancing U.S. interests” on the Chinese currency.
Twelve-month non-deliverable yuan forwards ended the week at 6.6115 per dollar, compared with 6.6185 on April 16. The contracts reached 6.5930 on April 22, reflecting bets that the currency will strengthen about 3 percent.
The dollar rose to the strongest level in two weeks versus the yen yesterday as government reports showed U.S. new-home sales rose in March by the most in almost five decades and orders for durable goods surged.
U.S. Housing Market
New-home sales rose 27 percent in March, the most since April 1963, and orders for U.S. durable goods excluding transportation items gained 2.8 percent, the Commerce Department reported. The median forecast of 75 economists in a Bloomberg News survey was for a 0.7 percent advance in bookings for goods meant to last at least three years.
The housing number was “incredible,” and the durable- goods report was “strong,” said Michael Woolfolk, senior currency strategist in New York at Bank of New York Mellon Corp., the world’s largest custodial bank, with more than $20 trillion in assets under administration. “These reports will send the FOMC back to the drawing board to fine-tune the interest rate trajectory.”
The dollar decreased 0.2 percent against the yen on March 16, when the Fed retained its pledge to keep the target lending rate at virtually zero for an “extended period.”
All of the 98 economists in a Bloomberg News survey predict the Federal Open Market Committee will hold its fed funds target at a range of zero to 0.25 percent on April 28.
Euro Versus Krone
The euro fell for a fourth week against the Norwegian krone, dropping 1 percent to 7.8833, as Greece called for financial assistance in an unprecedented test of the 16-nation currency’s stability and European political cohesion.
“The fragmented nature of the European bond market will call into question the euro’s credibility as a reserve currency,” said Adam Cole, head of global currency strategy at Royal Bank of Canada in London.
Canada’s currency touched its strongest level versus the greenback in almost two years this week after the Bank of Canada signaled it may be the first Group of Seven nation to increase borrowing costs as economic growth accelerates and stokes inflation.
The central bank dropped a phrase regarding its “conditional commitment” to keeping the record low 0.25 percent target lending rate unchanged until July unless the inflation outlook shifted.
The Canadian dollar gained 1.4 percent to 99.91 Canadian cents per U.S. dollar, from C$1.0128 last week. The currency reached parity with the greenback on April 6 for the first time since July 2008.
India’s rupee climbed 1.7 percent to 2.12 yen after the central bank raised interest rates for the second time in a month and ordered lenders to set aside more cash as reserves in an attempt to slow the highest inflation rate among the G-20.
The euro slid versus all 16 major counterparts as policy makers from G-20 nations meet in Washington today. Europe’s currency headed for a third weekly drop against the yen after the European Union raised its estimate for Greece’s deficit and Moody’s Investors Service cut the nation’s debt rating. The dollar traded close to a one-week high versus the yen before U.S. reports forecast to show improving orders for long-lasting goods and new home sales.
“Chances are G-20 officials will discuss Greece because it could lead to a global financial issue,” said Takashi Kudo, general manager of market information at NTT SmartTrade Inc., a unit of Nippon Telegraph & Telephone Corp., in Tokyo. “Markets seem to be mounting pressure on Greece to get a bailout, with the euro weakening. Risk aversion is causing the dollar and yen to be bought.”
The euro fell to $1.3215 at 12:28 p.m. in Tokyo from $1.3295 in New York yesterday, and touched $1.3202, the lowest level since April 30, 2009. The 16-nation currency declined to 123.55 yen from 124.28 yen. The dollar traded at 93.50 yen from 93.49 yen, after reaching 93.63 yen, the highest since April 14.
The yen typically strengthens in times of financial turmoil as Japan’s trade surplus frees the nation from dependence on overseas capital. The dollar benefits as the world’s main reserve currency.
G-20 Meeting
The EU lifted its estimate for Greece’s deficit to 13.6 percent of gross domestic product, while Ireland overtook the southern European nation as the EU member with the largest deficit, at 14.3 percent.
“There are a number of countries who could easily go down the same path, and the ability for Europe to bail out all of those economies is, I would imagine, quite limited,” said Adam Carr, a senior economist at ICAP Australia Ltd. in Sydney. “A resolution is needed quite quickly. Otherwise, the euro is going to continue to weaken.”
Moody’s lowered Greece’s credit rating to A3 from A2, four grades above junk, while credit-default swaps tied to the debt climbed to a record 644 basis points. Greece is prepared to ask euro-region governments for a bridge loan, a Greek government official said, as debt worth $11.3 billion comes due next month and borrowing costs surge to the highest since 1998.
G-20 finance chiefs including U.S. Treasury Secretary Timothy F. Geithner and European Central Bank President Jean- Claude Trichet may also intensify pressure on China to revalue the yuan at today’s talks, which Geithner called an “avenue for advancing U.S. interests” on the Chinese currency.
Central Bankers
Central bankers in India and Brazil this week backed a stronger yuan as did the International Monetary Fund and EU governments. Speculation the G-20 will urge China to revalue its currency boosted yuan non-deliverable forwards to a three-month high yesterday.
“Political pressure on China to resume yuan appreciation will likely remain in place at the G-20 meeting,” said Sebastien Barbe, head of emerging market research at Credit Agricole CIB in Hong Kong. “This should keep the dollar-yuan NDF discount wide.”
Twelve-month non-deliverable forwards were little changed at 6.6023 yuan per dollar after reaching 6.5930 yesterday, the highest level since Jan. 11, according to data compiled by Bloomberg. The contracts reflect bets the currency will strengthen 3.4 percent from the spot rate of 6.8263.
The dollar rose to a seven-week high versus the Swiss franc on speculation signs of U.S. growth will increase.
‘Renewed Optimism’
Durable goods orders rose for a fourth month and new home sales ended four months of declines, Bloomberg News surveys of economists showed before the Commerce Departments reports today.
“Renewed optimism about the strength of the U.S. economy is adding to the dollar’s appeal,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington. “Tonight’s data is all about quality, not quantity, with U.S. durable goods orders due for release.”
The U.S. currency climbed to 1.0837 Swiss francs from 1.0781, after advancing to 1.0850 francs, the strongest since March 2.
The pound weakened against the dollar and yen after a second televised debate renewed concern next month’s election won’t produce a government strong enough to tackle the U.K.’s deficit.
Pound Under Pressure
Conservative David Cameron failed to derail Nick Clegg in the U.K. campaign’s second debate, four instant polls showed, pointing to a hung parliament with Prime Minister Gordon Brown’s Labour Party as the largest bloc.
Sterling weakened 0.3 percent to $1.5335 and 0.3 percent to 143.38 yen.
The pound may rally to a two-month high against the dollar after the U.K. currency stayed above its 20-day moving average, Ueda Harlow Ltd. said, citing trading patterns.
“Technical charts are signaling an acceleration in rising momentum for the British currency,” said Toshiya Yamauchi, a senior foreign-exchange analyst at the online currency-trading company. “The currency may test the $1.56 level, which represents the top of the cloud on a daily ichimoku chart.”
April 17 -- The yen advanced against all of its most-traded counterparts as speculation China may take further steps to slow its economy and Greece may trigger a $61 billion rescue package spurred demand for relative safety.
The dollar dropped for two straight weeks against the yen for the first time since January after Goldman Sachs Group Inc. was charged with fraud, making U.S. stocks less attractive. Canada’s dollar fell against the greenback for the first time in three weeks after touching parity for a second week before the Bank of Canada’s policy meeting on April 20.
“The Greece story isn’t going away soon, and we expect further tightening from China,” said Vassili Serebriakov, a strategist at Wells Fargo & Co. in New York. “That’s triggered some caution in the market, and that’s why you’re seeing the yen doing better.”
The yen gained 1.1 percent to 124.44 per euro yesterday, from 125.79 on April 9. Japan’s currency appreciated 1.1 percent to 92.17 against the dollar, from 93.18. It advanced to 91.91 yesterday, the strongest level since March 25. The euro was little changed at $1.3503, compared with $1.35.
The dollar dropped to the lowest level against the yen in almost a month as Goldman Sachs was sued by the Securities and Exchange Commission for fraud related to collateralized debt obligations that contributed to the worst financial crisis since the Great Depression. The charges “are completely unfounded,” Goldman Sachs said in a statement.
‘Riveted’ on Goldman
“The Goldman news has people riveted,” said Firas Askari, head currency trader in Toronto at Bank of Montreal, Canada’s fourth-largest lender. “Risk off.”
The Standard & Poor’s 500 Index erased its weekly gain, ending the week down 0.2 percent. Crude oil dropped 2.3 percent this week, the most since the five days ended Jan. 22.
New Zealand’s dollar slid 2.1 percent to 65.31 yen this week and Australia’s currency lost 2 percent to 85.18 yen on speculation investors will reduce carry trades, in which they buy higher-yielding assets with amounts borrowed in nations with low interest rates. Japan’s benchmark of 0.1 percent has made the yen popular for funding such transactions.
Twelve-month non-deliverable yuan forwards finished the week at 6.6185 per dollar, indicating traders bet China’s currency may gain 3 percent in the next 12 months. China has pegged the yuan at about 6.83 since July 2008, after allowing it to rise 21 percent in the previous three years.
China’s cabinet raised minimum mortgage rates and down- payment ratios for some home purchases, saying “more forceful” steps are needed to cool speculation after property prices rose at a record pace in March.
‘Prudent Policy’
“It’s what China needs to do and should do,” said Alan Ruskin, head of currency strategy at Royal Bank of Scotland Group Plc in Stamford, Connecticut. “This is prudent policy to achieve sustained growth over the cycle.”
The nation’s economy grew 11.9 percent from a year earlier in the biggest gain since the second quarter of 2007, the statistics bureau said this week.
Singapore’s dollar rallied the most against the greenback in six months, appreciating 1 percent to S$1.3756 as its central bank unexpectedly revalued its currency after the government raised forecasts for economic growth and inflation.
The Monetary Authority said it will seek a “modest and gradual appreciation” in the local dollar and shift to a stronger range for currency fluctuations, the first such combined move in its 39-year history.
Greece Talks
The euro fell for a second straight week versus the yen before talks on Greece involving the European Union, the International Monetary Fund and the European Central Bank that are scheduled to begin on April 19.
European finance ministers offered as much as 30 billion euros ($41 billion) in three-year loans in 2010 at about 5 percent, compared with the three-year Greek bond yield of 7.21 percent. Another 15 billion euros would come from the International Monetary Fund.
“I see Greece doing the sensible thing and turning its back on the bond market,” said Andrew Wilkinson, senior market analyst at Interactive Brokers Group LLC in Greenwich, Connecticut. “We say take it at 5 percent.”
Canada’s dollar slid 1 percent to C$1.0128 versus the greenback this week after trading at 99.54 Canadian cents versus the dollar on April 14, the strongest level since June 2008.
The Bank of Canada will meet April 20 to decide on interest rates. Governor Mark Carney signaled last month he’s open to raising the target lending rate as soon as June 1 as inflation and growth outpace forecasts.
South Africa’s rand was the biggest loser versus the dollar, declining 1.8 percent to 7.390 on speculation the nation’s central bank will lower its target lending rate, now at 6.5 percent. The nation’s retail sales unexpectedly contracted for a 13th month in February, a report showed this week.
Jan. 1 -- The dollar posted its first monthly gain since June versus the currencies of major U.S. trading partners as the Federal Reserve moved closer to withdrawing stimulus measures that helped cause the greenback to fall 4.2 percent for the year.
The dollar advanced to a three-month high against the yen and rallied versus the euro after the Fed said at the conclusion of its Dec. 16 meeting that job losses are “abating.” The greenback pared its annual decrease against the Australian dollar and Norwegian krone as a surge in Treasury yields made the U.S. currency less attractive as a funding vehicle for the purchase of higher-yielding assets.
“We are seeing the dollar recover probably into the first quarter of next year,” said Thanos Papasavvas, who helps manage more than $5 billion in London, in an interview on Bloomberg Radio. “We would expect the unemployment rate to start to stabilize.”
The trade-weighted Dollar Index, which the ICE futures exchange uses to track the greenback against currencies including the euro, yen and pound, increased 4 percent in December to 77.860 yesterday. It was the first monthly advance in six months and the biggest gain since January 2009.
The index finished the decade down 24 percent as U.S. dominance of the global economy diminished and emerging markets grew. The introduction of the euro in January 1999 created an alternative to the dollar as a global reserve currency.
Foreign Reserves
The U.S. currency’s share of foreign reserves held by global central banks dropped to 61.6 percent during the quarter ended Sept. 30, the lowest on record, from 71 percent a decade ago, the International Monetary Fund reported on Dec. 30. The euro’s share rose to 27.7 percent, from 17.9 percent.
“You might get periodic episodes of a little bit of dollar strength,” said Tom Fitzpatrick, chief technical analyst at Citigroup Inc. in New York, in an interview on Bloomberg Radio, “But we really don’t feel any of the underlying parameters for dollar weakness has changed that much.”
The dollar appreciated 4.8 percent to $1.4321 per euro on Dec. 31, from $1.5005 at the end of November, paring its loss in 2009 to 2.5 percent. The U.S. currency advanced 7.7 percent to 93.02 yen, from 86.41, and gained 2.6 percent for the year. It touched 93.15 yesterday, the highest level since Sept. 7. The euro increased 2.7 percent to 133.20 yen in December and advanced 5.1 percent in 2009.
Barclays’s View
Barclays Plc, the world’s third-largest currency trader, raised its three-month forecast for the dollar against the euro on Dec. 10 to $1.45 from $1.52 and its six-month outlook to $1.40 from $1.45.
The median forecast of 43 economists surveyed by Bloomberg News is for the dollar to trade at $1.51 by the end of March and $1.49 by June 30. The dollar will trade at 90 yen by the end of March and 93 in six months, according to economists.
The yen was the only major currency to fall against the dollar for the year, weakening on speculation the Fed will phase out stimulus measures while the Bank of Japan steps up efforts to fight deflation.
The yield premium on 10-year Treasury notes over similar- maturity Japanese bonds rose yesterday to the highest level in more than two years, making U.S. assets more attractive than Japan’s securities.
The Brazilian real, South African rand, the Australian and New Zealand dollars and the Norwegian krone were the best performers against the greenback in 2009 among major currencies, rising at least 20 percent as signs of global recovery spurred investors to sell dollars and buy higher-yielding assets.
2009 Returns
Buying the five currencies with funds borrowed in the dollar and yen would have returned 34 percent in 2009, according to Bloomberg data. The same trade would have lost 26 percent in 2008.
The Aussie and krone fell in December against the dollar after the U.S. Labor Department reported the fewest monthly job losses since before the recession, fueling speculation the Fed will remove stimulus measures and prepare investors for higher interest rates in 2010.
The Fed held the target rate for overnight lending between banks at zero to 0.25 percent on Dec. 16 while saying “economic activity has continued to pick up.”
Futures trading in Chicago showed yesterday a 62 percent chance that the Fed will raise its target lending rate by at least a quarter-percentage point by its June meeting, up from 31 percent odds a week ago.
U.S. employers eliminated 1,000 jobs in December after cutting 11,000 in the previous month, according to the median forecast of 58 economists in a Bloomberg News survey. The report from the Labor Department is due on Jan. 8.
“The surge in growth can continue for a while,” said David Tien, senior quantitative researcher at Fischer Francis Trees & Watts in New York, which has $27 billion in assets. “The key question is against which currency the dollar’s gain can be the most pronounced. We think it’s the yen.”
Aug. 26 -- The dollar may extend its gain versus the Canadian dollar, the Norwegian krone and the Brazilian real after a drop in oil prices reduced demand for the currencies of commodity producers.
The greenback pared its decline versus the euro yesterday as the Treasury’s sale of two-year notes received higher demand from a group including foreign central banks. The yen appreciated against all of its major counterparts including the real and South African rand as U.S. stocks pared increases, encouraging investors to take refuge.
“We saw the Canadian dollar under a little bit of pressure in the early afternoon here as the U.S. dollar was posting some decent gains,” said JP Blais, vice president of foreign- exchange sales at BMO Capital Markets in Toronto. “With the equity market losing a little bit of the steam that it had, oil is having a harder time making some new highs.”
The dollar was little changed at $1.4298 per euro at 6:15 a.m. in Tokyo. The U.S. currency traded at 94.19 yen after dropping 0.4 percent. The yen was at 134.67 per euro following an increase of 0.5 percent.
The Canadian dollar declined for the first time in six days, weakening 1 percent to C$1.0868 per U.S. dollar. The drop this week will probably be capped at C$1.0975 versus the greenback, according to Blais.
The currency known as the loonie also fell as Timothy Lane, deputy governor of the Bank of Canada, said in a speech in Kingston, Ontario, that the strength of the currency presented an “important risk” to growth. The Canadian dollar advanced 20 percent from a four-year low reached in March.
Weaker Krone
The krone dropped 0.7 percent to 6.0501 versus the dollar, while the real lost 1.1 percent to 1.8410. Crude oil for October delivery decreased 3.5 percent to $71.76 a barrel, paring its rally this year to 60 percent. Norway is the fifth-largest oil producer, and oil is Canada’s biggest export. Commodities account for two-thirds of Brazil’s exports.
The yen appreciated 1.5 percent to 50.66 versus the real and 0.5 percent to 12.05 against the rand as U.S. stocks pared gains, reducing demand for higher-yielding assets. Japan’s target lending rate of 0.1 percent compares with 8.75 percent in Brazil and 7 percent in South Africa.
The euro rose earlier versus the dollar on speculation a German report today will show the fifth monthly expansion in business confidence. Government spending helped lift Germany out of its worst recession since World War II, according to a Federal Statistics Office report yesterday confirming a 0.3 expansion in the second quarter.
‘European Recovery’
“I’m more interested in what’s happening in Europe,” said Richard Franulovich, a senior currency strategist at Westpac Banking Corp. in New York. “The U.S. is going to settle for the next few months. The European recovery is coming more quickly than people expected.”
The dollar declined to near the lowest level versus the euro in two weeks on reduced demand for safety as U.S. economic reports showed a gain in consumer confidence and slower drop in home prices. The dollar traded within a fifth of a cent of $1.4376 reached on Aug. 21, the weakest since Aug. 7.
“This data was firm,” said Meg Browne, a currency strategist at Brown Brothers Harriman & Co. in New York. “The euro got to that $1.4360 level, it wasn’t really able to break to new highs.”
The S&P/Case-Shiller index of property values in 20 U.S. metropolitan areas decreased 15.4 percent in June from a year earlier after a 17 percent drop in the 12 months ended in May. The median forecast of 31 economists in a Bloomberg News survey was for a 16.4 percent reduction.
The New York-based Conference Board reported that its consumer confidence index increased to 54.1 in August from 47.4 in the previous month. The median forecast of 67 economists in a separate Bloomberg News survey was for an advance to 47.9 from a previously reported 46.6.
Indirect bidders, which include foreign central banks, bought 49.4 percent of the $42 billion in two-year Treasury notes auctioned today, up from 33 percent in July.
Aug. 24 -- The dollar advanced against the euro for the first time in five days as U.S. stocks erased gains, reviving demand for relative safety.
The pound declined to an 11-week low versus the euro as two-year gilts yielded near the least relative to comparable- maturity German notes since January. The euro earlier gained versus the yen as a report showed European industrial orders climbed the most in 19 months.
“People are seeing negative equities and running back to the safe-haven guys,” said Brian Kim, a currency strategist at UBS AG in Stamford, Connecticut. “This market’s thin enough that you could move the market” just by closing some trades.
The U.S. currency appreciated 0.2 percent to $1.4296 per euro at 4:09 p.m. in New York, from $1.4326 on Aug. 21. The yen traded at 135.14 against the euro, compared with 135.21. The dollar rose 0.2 percent to 94.55 yen, from 94.38.
Stocks erased advances as financial institutions slumped after SunTrust Banks Inc. said lenders face more credit losses and commercial real estate may falter through 2010. The Standard & Poor’s 500 Index was little changed after rallying 2.2 percent last week.
Sterling dropped against 14 of the 16 most-traded counterparts tracked by Bloomberg on speculation the Bank of England will depress yields on gilts, making the U.K.’s assets less attractive to foreign investors.
The U.K. two-year note yielded 44 basis points less than the equivalent German security. The spread reached 48 basis points on Aug. 21, the widest since Jan. 2.
Pound Versus Euro
Sterling dropped as much as 0.6 percent to 87.28 pence per euro, the weakest level since June 8. The pound dropped 0.6 percent to $1.6411.
The euro erased its gains versus the yen today as Treasury yields fell and the European Central Bank Governing Council member Yves Mersch warned against “succumbing to optimism” with regard to the economic situation, Luxembourg’s Wort reported, citing an interview to be published tomorrow. fxisforex.blogspot.com
Orders at industrial companies rose 3.1 percent in June from the prior month, the biggest increase since November 2007, the European Union’s statistics office said. The production and income category of the Chicago Fed’s National Activity Index increased last month, a report showed.
German business confidence probably advanced in August for a fifth month, according to the median forecast of 41 analysts in a Bloomberg News survey before the Munich-based Ifo institute’s report on Aug. 26.
‘Key’ Ifo Data
“We’ve got Ifo coming out this week, and that’s going to be quite key,” said Lauren Rosborough, a currency strategist in London at Westpac Banking Corp. “I get the feeling that improvement in Europe has not been completely priced in.”
The euro will probably gain versus the dollar, approaching $1.4450 in a month, she predicted.
Speaking at the annual central bankers’ symposium in Jackson Hole, Wyoming, last week, Bernanke and ECB President Jean-Claude Trichet said the global economy is pulling out of its deepest recession since the 1930s.
“Prospects for a return to growth in the near term appear good,” while “critical challenges remain,” including possible further losses for financial firms, Bernanke said Aug. 21.
Trichet said at the conference the following day there are signs confirming that the economy “is starting to get out of the period of freefall.” This “does not mean at all that we do not have a very bumpy road ahead of us,” he said.
“Bernanke was the cheerleader of growth, Trichet expressed cautiousness on the growth outlook,” Hans-Guenter Redeker, the London-based global head of currency strategy at BNP Paribas SA, France’s biggest bank, wrote in a note today.
The global economy is showing “clear” signs of a rebound, and interest rate policies are likely to stay accommodative for many months, John Lipsky, the International Monetary Fund’s first deputy managing director, wrote on the Washington-based lender’s Web site today.
Aug. 18 -- The euro rose for the first time in three days against the yen as a report showed German investor confidence jumped to the highest level in more than three years, adding to evidence an economic recovery is taking shape.
The pound increased from near a one-month low versus the dollar after a report showed the U.K. inflation rate was higher in July than forecast as the nation’s recession eased. The dollar erased its loss against the euro as a report showed U.S. housing starts unexpectedly dropped, reviving demand for the greenback’s safety.
“The German confidence report is a positive for the euro, suggesting Europe is coming out of recession,” said Sacha Tihanyi, a currency strategist at Scotia Capital Inc. in Toronto. “Then the currency market took some negative tone after the housing data, keeping dollar selling much restrained. You get a feeling the market is questioning whether there will be a further sustained move in risky assets on the upside.”
Europe’s currency increased 0.2 percent to 133.31 yen at 9:58 a.m. in New York, from 133.08 yesterday. The euro was little changed at $1.4081 after earlier rising as much as 0.5 percent. It touched $1.4046 yesterday, the lowest level since July 30. The yen weakened 0.1 percent to 94.63 per dollar, from 94.50 yesterday, when it reached 94.21, the strongest level since July 29.
The Mannheim-based ZEW Center for European Economic Research said its index of investor and analyst expectations for Germany increased this month to 56.1 from 39.5 in July. The median forecast of 35 economists in a Bloomberg News survey was for the index to rise to 45.
Germany’s Growth
Germany’s economy grew 0.3 percent in the second quarter, bringing a halt to the worst recession since World War II sooner than forecasters expected, a report showed last week.
“Recent data shows Europe can benefit from the global economic recovery,” said Marcus Hettinger, a foreign-exchange strategist in Zurich at Credit Suisse Group AG, Switzerland’s largest bank by market value. The common currency may advance to $1.50 in three months, Hettinger said.
The dollar pared its gain versus the yen after the Commerce Department reported that U.S. housing starts unexpectedly declined to an annual rate of 581,000 last month from a revised 587,000 pace in June. The median forecast of 70 economists surveyed by Bloomberg News was for an increase to 599,000 from a previously reported 582,000.
“We’ve been used to a bit more positive surprises on the housing front,” said Brian Kim, currency strategist at UBS AG in Stamford, Connecticut. “You’re seeing some rotations following that, potentially away from the euro and into Treasuries. It’s an environment where people are still skittish, and the summer liquidity just causes more knee-jerk reactions than usual.”
U.S. Treasuries
Treasuries pared losses on the housing data, with the yield on the benchmark 10-year note little changed at 3.47 percent and the rate on the two-year security at 1.02 percent.
The Dollar Index, which IntercontinentalExchange Inc. uses to track the dollar against currencies of six major U.S. trading partners such as the euro and yen, was little changed at 79.291 after earlier falling as much as 0.3 percent.
Construction of single-family houses, which account for 75 percent of the industry, rose 1.7 percent to a 490,000 rate, today’s Commerce Department report also showed.
Prices paid to U.S. producers decreased 0.9 percent in July after rising 1.8 percent in the previous month, the Labor Department said. The median forecast of 70 economists surveyed by Bloomberg News was for a decrease of 0.3 percent.
Stronger Pound
Sterling advanced versus the dollar and euro after a U.K. Office for National Statistics report showed the inflation rate unexpectedly held at 1.8 percent in July, exceeding the median forecast for a reduction to 1.5 percent. The rate will probably drop below 1 percent later this year and may miss the central bank’s goal in three years, Bank of England projections show.
The pound appreciated 0.6 percent to $1.6451 after reaching $1.6276 yesterday, the lowest level since July 17. Sterling reduced its decline since Aug. 5 to 3.2 percent. The currency slumped after policy makers said on Aug. 6 that the recession was deeper than anticipated. The euro fell 0.6 percent to 85.64 British pence today.
The dollar is in a downtrend after falling below 94.76 yen, a key price based on the Fibonacci sequence of numbers, according to Yoh Nihei, trading group manager at Tokai Tokyo Securities Co. That level is a 50 percent retracement from a two-month high of 97.79 reached on Aug. 7 to a six-month low of 91.74 reached on July 13.
The next level of support will be 94.05, which represents a 38.2 percent retracement of the decline, Nihei said. Support is where buy orders are clustered.
“That’s the support level the dollar failed to break in late July,” Tokyo-based Nihei said yesterday.
Aug. 6 -- The yen may rise further as demand for higher-yielding currencies fell after reports showed U.S. service industries contracted last month at a faster pace and companies eliminated more jobs than economists forecast.
The pound increased yesterday to its highest level against the dollar in more than nine months as U.K. services industries grew in July by the most in 1 1/2 years. The Bank of England and the European Central Bank will probably keep their benchmark lending rates at record lows at their policy meetings today, according to economists surveyed by Bloomberg News.
“The desire for risk is so high that it just needs a pause,” said John Taylor, chief executive officer in New York at FX Concepts LLC, in an interview on Bloomberg Television. “People looking for jobs may find it difficult for years.” Taylor’s firm has $9 billion under management.
The yen traded at 136.77 against the euro at 6:04 a.m. in Tokyo, after rising 0.3 percent yesterday. Japan’s currency was at 94.93 per dollar, following a 0.3 percent increase yesterday. The dollar was little changed at $1.4410 per euro after touching $1.4447, the weakest level since Dec. 18.
Japan’s currency increased 1.1 percent to 11.99 against the South African rand and gained 0.6 percent to 13.30 versus the Swedish krona on bets yesterday’s U.S. economic reports will discourage Japanese investors from buying higher-yielding assets overseas. Japan’s 0.1 percent target lending rate compares with 7.5 percent in South Africa and 0.25 percent in Sweden.
U.S. Stocks
The Standard & Poor’s 500 Index fluctuated between a gain and a loss after a four-day rally that pushed the gauge of U.S. stocks above 1,000 on Aug. 3 for the first time since November. The dollar touched the weakest level this year versus the euro as U.S. stocks trimmed losses.
Mexico’s peso strengthened yesterday beyond 13 versus the dollar for the first time since June 1 after Moody’s Investors Service affirmed the government’s bond ratings and stable outlook, damping speculation the nation will suffer its first downgrade since 1995. Moody’s kept Mexico’s foreign debt rating at Baa1, the third-lowest investment-grade level, saying the government’s commitment to fiscal discipline offset concern growth is weak.
Morgan Stanley recommended yesterday that its clients add to their bets that the peso will advance versus the dollar, saying the Moody’s affirmation “adds to the positive momentum.” Morgan Stanley expects a “longer-term” move to 12 per dollar, strategists wrote in a research note. The peso gained as much as 1 percent to 12.9981.
Stronger Pound
The pound climbed as much as 0.6 percent to $1.7043, the highest level since Oct. 21, as a report showed U.K. services industries grew last month by the most in 1 1/2 years.
An index of services rose to 53.2 last month from 51.6 in June, Markit said yesterday in London. Factory output climbed 0.4 percent in June, the U.K.’s statistics office said.
Sterling gained 16 percent versus the dollar and 13 percent against the euro this year.
Eight of 12 primary dealers surveyed by Bloomberg said the U.K. central bank will end a five-month program of bond purchases after announcing a pause at its policy meeting today. Four -- BNP Paribas SA, RBC Capital Markets, Merrill Lynch and UBS AG -- predict policy makers will increase purchases after the bank spent 125 billion pounds ($212 billion) of the 150 billion pounds authorized by the Treasury in March.
The Bank of England will keep its main rate at 0.5 percent, while the ECB will probably maintain its benchmark at 1 percent, according to the median forecast of economists in separate Bloomberg News surveys.
U.S. Services
The Institute for Supply Management’s index of U.S. non- manufacturing businesses, which make up almost 90 percent of the economy, fell to 46.4 in July from 47 in the previous month, according to the Tempe, Arizona-based group. Fifty is the dividing line between expansion and contraction.
U.S. companies cut an estimated 371,000 workers from payrolls last month after a revised reduction of 463,000 in June, ADP Employer Services reported yesterday. The median forecast of 30 economists in a Bloomberg News survey was for a drop of 350,000.
The Labor Department’s data on U.S. initial jobless claims for last week are due today, and its July payroll report will come tomorrow.
“It appears investors are positioning for a pullback in risk appetite,” said Samarjit Shankar, director of strategy for the global markets group in Boston at Bank of New York Mellon Corp., the world’s largest custodial bank. “We haven’t seen concrete signs of a sustainable recovery.”
Aug. 3 -- The yen declined and the pound rose after HSBC Holdings Plc posted an unexpected profit and former Federal Reserve Chairman Alan Greenspan said the most severe recession in at least five decades may be ending.
Japan’s currency fell against all its 16 most-traded counterparts on increased demand for higher-yielding assets as HSBC reported its results. U.S. manufacturing shrank in July at the slowest pace in almost year, a report from the Institute for Supply Management is forecast to show today.
“HSBC’s results were good compared to expectations, so that’s proven supportive to the pound and is dragging on the yen,” said Geoffrey Yu, a foreign-exchange strategist in London at UBS AG, which Euromoney Institutional Investor Plc ranks as the world’s second-biggest currency trader “Clients are skeptical about this rally but can’t afford not to be in it.”
The yen weakened 1 percent to 159.76 per pound at 7:12 a.m. in New York, from 158.23 on July 31. Japan’s currency dropped 0.5 percent to 135.70 per euro and slid 0.3 percent to 94.97 per dollar. The U.S. currency declined 0.2 percent to $1.4290 per euro, compared with $1.4257.
Economic growth may resume at a rate faster than most economists foresee, Greenspan said in an interview yesterday on ABC’s “This Week” program, predicting 2.5 percent in the current quarter.
The MSCI World Index of shares rose 1 percent, while Europe’s Dow Jones Stoxx 600 Index gained 1.7 percent.
The Institute for Supply Management’s U.S. factory gauge increased last month to 46.5, from 44.8 in June, according to the median forecast of 62 economists surveyed by Bloomberg. Readings less than 50 signal contraction. The report from the Tempe, Arizona-based institute is due at 10 a.m. New York time.
Pound Versus Euro
The pound rose for a sixth day against the euro, gaining to 84.89 pence as the U.K.’s Chartered Institute of Purchasing and Supply and Markit Economics said today manufacturing expanded in July for the first time in more than a year.
A gauge based on a survey of factories climbed to 50.8 from a revised 47.4 in June. The median forecast of 25 economists surveyed by Bloomberg News was for a reading of 47.8. Readings above 50 show expansion.
The FTSE 350 Banks Index rose 5.3 percent, the most since May 5, on HSBC’s results and as Barclays, the U.K.’s second- largest lender, said first-half earnings rose 10 percent and profit from investment banking almost doubled.
‘Economy Is Stabilizing’
“There are signs that the economy is stabilizing, and the market is right to feel reassured,” said Jane Foley, research director in London at Forex.com, an online currency trader.
The Dollar Index, which the ICE uses to track the U.S. currency against those of six major U.S. trading partners including the euro, reached 77.98, the lowest level since Dec. 18, on reduced demand for safety.
The U.S. economy shrank at a 1 percent annual pace in the second quarter, the Commerce Department reported July 31, better than economists forecast. Stabilization of housing markets and consumer spending, a lessening of financial turmoil and increased government spending all suggest the longest recession since the 1930s may be close to ending.
Currencies sensitive to raw material prices, including the Australian dollar, advanced as Nouriel Roubini, the New York University economist who predicted the financial crisis, told a mining conference in Australia that commodities may extend their rally in 2010 as the global recession abates.
Chinese Factories
China’s manufacturing expanded in July, a report showed today. The CLSA China Purchasing Managers’ Index rose to a seasonally adjusted 52.8, the highest level in a year, from 51.8 in June, CLSA Asia-Pacific Markets said. A government-backed index, released Aug. 1, also showed an expansion.
Futures traders trimmed bets the euro will gain against the dollar last week, figures from the Washington-based Commodity Futures Trading Commission showed. Futures are agreements to buy or sell assets at a set price and date. The figures reflect holdings in currency-futures contracts at the Chicago Mercantile Exchange as of July 28.
The difference in the number of wagers by hedge funds and other large speculators on an advance in the euro compared with those on a drop -- so-called net longs -- was 20,287 on July 28, compared with net longs of 34,772 a week earlier.
Foreign-exchange traders are losing faith that Mexican President Felipe Calderon will push through the tax increases needed to rein in the budget deficit and stem a rout that has made the peso the worst-performing major currency against the dollar in the past year.
Options traders are more bearish on the peso over the next six months than 12 of the other 16 most-traded currencies against the U.S. dollar tracked by Bloomberg, according to derivatives known as risk-reversals. Morgan Stanley strategists say Mexico’s economy is headed for “unsustainable” deficits as oil output declines while RBC Capital Markets advises investors to sell the currency.
The peso was little changed at 13.1880 versus the dollar today after gaining 3.7 percent this year.
July 31 -- The dollar declined to the lowest level this year against six major U.S. trading partners after a report showed the U.S. economy shrank less than economists forecast, reducing the demand for the greenback as a refuge.
The Swedish krona advanced against the euro to the strongest level since December after a government report showed the economic contraction in the Scandinavian country slowed in the second quarter. The U.S. currency headed for a fifth month of declines against the pound, its longest run in five years, after a U.K. survey showed consumer confidence held at the highest level since April 2008.
“The typical pattern is that good economic news is bad for the dollar,” said Win Thin, a senior currency strategist at Brown Brothers Harriman & Co. in New York. “Equities are marching up. We had a better than expected GDP, which set the stage for all this.”
The dollar fell 1.4 percent 1.4271 per euro as of 12:29 p.m. in New York, from $1.4075 yesterday, and was at 94.58 yen from 95.56 yen. The Japanese currency weakened 0.3 percent to 134.95 per euro.
The Dollar Index, which the ICE futures exchange uses to track the currency against counterparts including the yen, pound and Swedish krona, touched 78.22, the lowest since Dec. 18.
The dollar’s decline versus the yen accelerated after running into stops, or pre-set orders, to sell the greenback, above 95 yen, according to Shaun Osborne, a currency strategist at TD Securities Inc. in Toronto.
‘Some Restraint’
U.S. gross domestic product contracted at a less-than- projected 1 percent annual rate after shrinking 6.4 percent in the prior three months, the most in 27 years, Commerce Department figures showed. Inventories dropped at a record $141.1 billion annual pace, after a $113.9 billion decline.
“The inventories data shows stunning drawdowns in both Q1 and Q2,” wrote Alan Ruskin, head of international currency strategy in North America at RBS Securities Inc. in Greenwich, Connecticut. “This bodes very well for H2 GDP data since the change in the change of inventories should be very positive. Obviously there will be some restraint to this trade because of month-end flows, but I expect players will buy risk trades again early next week.”
The Swedish krona touched 10.3 per euro, the strongest since Dec. 1 after Statistics Sweden said the country’s gross domestic product contracted an annual, work-day adjusted 6.2 percent, from a decline of 6.5 percent in the previous quarter.
The krona has gained 4.8 percent against the euro this month and 5.6 percent against the dollar. It is the second best performer among the 16 major currencies after the Canadian dollar, which rose 7.6 percent against the dollar in July.
‘Ahead of Fundamentals’
Canada’s dollar traded at C$1.081 against the greenback, near the strongest since October, even after a government report showed the nation’s economy shrank a more-than-forecast 0.5 percent in May. The currency, known as loonie, touched C$1.075 on July 28, the strongest level since Oct. 3.
“There’s disconnection between market optimism and numbers on the ground,” said Steven Englander, chief U.S. currency strategist at Barclays Plc in New York. “The Canadian dollars running ahead of fundamentals. We had some pretty nasty number out of Canada recently.”
The Canadian currency will decline to C$1.13 in a month, according to Barclays.
Sterling gained 0.4 percent to $1.6557 after GfK NOP said that an index of consumer sentiment in the U.K. was unchanged in July at minus 25. The reading is up from minus 39 a year earlier, adding to signs that the U.K.’s worst slump in a generation is easing. The currency was up 0.5 percent in July.
Implied Volatility
The Polish zloty advanced a record 8 percent this month to 2.93 per euro, as the country posted the only positive first- quarter growth rate among European Union’s 10 eastern members. The currency was the biggest gainer among 26 emerging-market counterparts tracked by Bloomberg.
The dollar dropped against 14 of 16 most actively traded currencies this month, losing 1 percent against the euro. The yen gained 1.2 percent versus the dollar and 0.2 percent against the European currency.
The euro-dollar exchange rate swung less than 3 cents above and below $1.40 this month. Implied volatility on seven major currencies against the dollar dropped to 12.73 today, the lowest since October, indicating traders expect less price frustration in the foreign-exchange market in coming months.
Moving Sideways
“We are moving to sideways until September when gradual improvement in macro data adds to fresh momentum for dollar shorts,” said Mike Moran, a senior currency strategist at Standard Chartered in New York. A short position is a bet a currency will decline.
Investors should buy the U.S. currency against the yen, with a target above 105 per dollar, as Japan’s trade and investment flows deteriorates, Goldman Sachs Group Inc. said today in an e-mailed note.
The yen is the most overvalued currencies in the Group of 10 major currencies, and “neutral” market positioning allows investors to add more bets against the Japanese currency, according to Goldman. Trade and investment flows to Japan have turned from a surplus of 6 percent of its GDP, to a deficit of 5 percent of the economy, according to Goldman.
“We could be getting closer to the tipping point for the yen,” Mark Tan, a Goldman analyst in New York wrote.
July 29 -- The dollar rose versus the euro for a second day as China’s stocks plunged the most in eight months and a report showed orders for U.S. durable goods fell last month, bolstering demand for the greenback as a safe haven.
The U.S. currency advanced versus the Australian dollar and South African rand as China led a decline in emerging-market stocks on speculation the government will curb inflows. The Swiss franc declined to the weakest level versus the euro this month after a central bank official said policy makers will halt any appreciation of the currency.
“With equities softer, risk currencies are coming off,” said Daragh Maher, deputy head of global foreign-exchange strategy in London at Calyon, the investment-banking unit of Credit Agricole SA. “Anything that suggests expectations for growth in China are lower today than yesterday is going to hit the risk currencies.”
The dollar advanced 0.4 percent to $1.4116 per euro at 8:34 a.m. in New York, from $1.4167 yesterday. It earlier traded at $1.4091, the strongest level since July 17. The yen traded at 133.95 against the euro, compared with 133.95. The dollar increased 0.3 percent to 94.86 yen from 94.55.
Australia’s currency fell 1 percent to 81.87 U.S. cents after China’s Shanghai Stock Exchange Composite Index dropped 5 percent, the most since Nov. 18. The Aussie touched 83.38 cents yesterday, the highest level since Sept. 29.
Weaker Rand
South Africa’s rand fell a fourth day, dropping 0.9 percent to 7.9312 per dollar. It touched 7.9488 earlier, the weakest level since July 20.
The franc declined as much as 0.2 percent to 1.5271 per euro, the weakest level since June 30, as Thomas Jordan, a Swiss National Bank governing board member, said in an article in the Swiss economic magazine Die Volkswirtschaft that policy makers will continue to intervene in the foreign-exchange market to prevent the currency from strengthening.
Orders for durable goods in the U.S. fell 2.5 percent in June, the first retreat in three months, the Commerce Department reported today in Washington. The median forecast of 73 economists surveyed by Bloomberg News was for a decrease of 0.6 percent.
Federal Reserve Bank of San Francisco President Janet Yellen said in a speech in Coeur d’Alene, Idaho, that the U.S. economy’s recovery is likely to be “painfully slow” as consumers spend less and save more. The U.S. is showing the “first solid signs” of emerging from recession, she said.
Japanese Investors
The yen was headed for a 1.6 advance versus the dollar in July on speculation Japanese investors will bring back funds from redemption payments as 18 billion euros ($25.5 billion) in European government bonds mature.
“Talk of sizeable Eurobond redemptions are weighing on the euro-yen,” said Sue Trinh, a senior currency strategist at RBC Capital Markets in Sydney.
South Korea’s won fell 0.3 percent to 1,239.95 against the dollar as the MSCI Asia Pacific Index of shares ended its longest winning streak in more than five years, falling 1.2 percent.
Bank of America Merrill Lynch Securities raised its forecasts for the euro against the dollar and the yen, citing rising purchases of the common currency by emerging market central banks seeking to they diversify their reserves.
The European currency will strengthen to $1.45 and 145 yen by September and $1.50 and 158 yen by year-end, strategists led by Steven Pearson in London wrote in a report yesterday. The bank previously forecast $1.32 and 139 yen for end-September and $1.38 and 152 yen for the end of the year.
‘Capital Inflows’
“Although the allocations of many investors to emerging markets are already at record levels relative to benchmark, we think their popularity as an investment destination will support growth at a pace sufficient to sustain strong capital inflows for perhaps another quarter or so,” Bank of America said. “In turn, this is likely to trigger another significant wave of reserve-manager flow diversification demand for euro-dollar.”
The 16-nation currency traded in July in a range of $1.3833 to yesterday’s high of $1.4304, the strongest level since June 3.
July 28 -- The dollar traded near the lowest level in seven weeks against the euro as Asian stocks extended a global rally, adding to evidence investors are shifting to higher-yielding assets.
The Australian dollar rose for a third day against the greenback after the Reserve Bank of Australia said the South Pacific nation’s economy may rebound faster than it forecast six months ago. The yen rose against the dollar on speculation Japanese exporters are taking advantage of the currency’s drop in the past week to repatriate funds.
“Rising share prices will make it easier for investors to take more risks,” said Toshiya Yamauchi, manager of the foreign-exchange margin trading department in Tokyo at Ueda Harlow Ltd. “Under such circumstances, the dollar and the yen will weaken, especially against the currencies of resource-rich nations and emerging markets.”
The yen fell to 135.54 per euro as of 6:07 a.m. in London from 135.48 in New York yesterday, when it reached 136.10, the lowest since July 2. Japan’s currency advanced to 95.06 per dollar from 95.18. It touched 95.38 yesterday, the weakest since July 7. The dollar traded at $1.4258 per euro from $1.4232.
MSCI’s Asia Pacific index of regional shares rose for an 11th day, the longest winning streak since January 2004, boosting demand for higher-yielding assets in carry trades. The index rose 0.7 percent today.
Dollar Index
The Dollar Index was near the lowest level this year before a report that economists said will show U.S. home prices fell at a slower pace in May, indicating the American economy may be recovering, trimming demand for safe haven currencies.
The S&P/Case Shiller index of 20 major metropolitan areas, scheduled for release today, will show property values fell 17.9 percent in May from a year earlier, according to a Bloomberg News survey of economists. The measure was down 18.1 percent in the 12 months ended April.
The Dollar Index, which the ICE uses to track the greenback against currencies including the yen, pound and Swedish krona, was at 78.546 from 78.626 yesterday, near this year’s low of 78.334 on June 2
The Australian dollar climbed after RBA Governor Glenn Stevens said it appears “that the downturn we are having may turn out not to be one of the more serious ones of the post-War era, in contrast to the experiences of so many other countries.”
Upside Risks
“We can much more easily imagine upside risks to the outlook, to balance out the downside ones, than was the case six month ago,” the Reserve Bank chief said in Sydney today.
Stevens left the benchmark lending rate at 3 percent on July 7 for a third month amid signs the lowest borrowing costs in half a century and government spending helped the nation skirt a recession.
“With Australia’s economy apparently doing well, there may be no more scope for interest-rate cuts,” said Masashi Kurabe, head of currency sales and trading in Hong Kong at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan’s biggest publicly traded bank. “Higher-yielding currencies such as Australia’s dollar will likely be popular, with demand from people in countries with low yields such as Japan.”
Benchmark interest rates of 8.75 percent in Brazil and 0.25 percent in Sweden compare with 0.1 percent in Japan and as low as zero in the U.S.
The Australian dollar rose to 82.81 U.S. cents from 82.27 cents yesterday.
Exporter Selling
Losses in the yen were tempered amid speculation Japanese exporters sold the dollar to bring back overseas earnings before the month-end.
“Exporters are prone to buy the yen, given that the end of the month is near,” said Yuji Saito, head of the foreign- exchange group in Tokyo at Societe Generale, France’s third- largest bank. “There’s talk that a lot of euro government bonds are maturing this week, so we may see some yen repatriation.”
Japanese companies forecast the yen would average 94.85 per dollar in the 12 months to March 2010, according to the Bank of Japan’s quarterly Tankan survey released July 1.
Adding to pressure on the dollar, China’s Assistant Finance Minister Zhu Guangyao said on the first day of bilateral talks with U.S. officials that his government remains “concerned” about the value of its U.S. assets.
Zhu’s remarks come after repeated public assurances by Treasury Secretary Timothy Geithner that the U.S. is committed to reining in a record budget deficit once an economic recovery is secured. China is the biggest foreign investor in U.S. government debt, and any decline in demand could push up borrowing costs.
‘Massive Holdings’
“China has massive holdings of Treasuries, so it is obviously worried,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan’s largest currency broker. “Any diversification away from the dollar could be gradual, and the greenback may weaken a bit.”
A rising number of derivative bets that the dollar will fall may indicate that the currency is poised to rebound, according to Bank of Tokyo-Mitsubishi UFJ Ltd. Futures positions, when they reach an extreme, are viewed as a contrarian indicator because traders often rush to reduce positions when momentum in a currency shifts.
The large dollar net short position “could make further headway on dollar selling more slow going and frustrating,” wrote Derek Halpenny, head of global-currency research in London at Bank of Tokyo-Mitsubishi, in a note yesterday. A short position is a bet an asset will decline.
The bank predicts the euro’s gains versus the dollar will stall in the $1.45 to $1.5 range, and then be followed by a move to $1.3 in 2010.
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