Franc Drops Versus Euro, Dollar as Stock Rally, U.S. Jobs Cut Safety Bids
Sept. 3 (Bloomberg) -- Nouriel Roubini, chairman and co-founder of Roubini Global Economics LLC, talks about the outlook for the global economy and the possible impact of a double-dip recession or an increase in risk aversion on gold and currencies. He talks with Francine Lacqua in Cernobbio, Italy, on Bloomberg Television's "Countdown." (Source: Bloomberg)
The Swiss franc fell against the euro and dollar as stock markets advanced and companies in the U.S. added more jobs than forecast in August, damping demand for the currency as a haven.
The franc also slipped against all 16 of its most-traded peers as investors judged gains this week that sent the currency to a record against the euro and near parity against the dollar were overdone. The Stoxx Europe 600 Index climbed 0.9 percent.
U.S. private payrolls that exclude government agencies climbed 67,000, after a revised 107,000 increase in July that was more than initially estimated, Labor Department figures in Washington showed today. The median estimate of economists surveyed by Bloomberg News called for a gain of 40,000.
“The jobs data was a little bit better than expected,” Marcus Hettinger, a strategist at Credit Suisse Group AG in Zurich, said in a telephone interview. “It’s negative news for the lower-yielding currencies like the franc. The move is now pretty high in dollar-Swiss as there’s a sign that the global economy is recovering.”
The franc fell 0.9 percent to 1.3106 per euro as of 4:50 p.m. in London, after reaching 1.2852 on Aug. 31, its strongest level since the single currency was introduced in 1999. It declined 0.6 percent to 1.0183 per dollar.
Franc Better Than Gold
The franc has risen 4.1 percent this year against a basket of 10 developed-world currencies as investors sought a haven, according to Bloomberg Correlation-Weighted Currency Indexes.
New York University Professor Nouriel Roubini said the Swiss franc, the dollar and the yen may be a better investment than gold if the world economy slips back into recession.
“If there was a double-dip recession, increasing risk aversion, some assets are going to be preferred, and gold will be one of them,” Roubini said today in an interview on Bloomberg Television’s ‘On The Move’ with Francine Lacqua. “But in that situation, things like the dollar, the yen, the Swiss franc have more upside in a situation of rising risk aversion because they are much more liquid than the gold market.”
Swiss inflation slowed for a fourth straight month in August, a report showed today, giving the central bank room to keep borrowing costs near zero. Swiss prices may be pushed down further as a stronger franc makes imports more affordable.
Consumer prices increased 0.3 percent from a year earlier after rising 0.4 percent in July, the Federal Statistics Office in Neuchatel said. That’s the least since December 2009 and was below economists’ forecast of an 0.4 percent gain, according to a Bloomberg survey. For the month, consumer prices were unchanged.
To contact the reporter on this story: Stephen Morris in London at smorris39@bloomberg.net.
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