Related News:
Dollar, Yen Weaken as Economic Data Spur Demand for Higher-Yielding Assets
The dollar and yen fell against most of their major counterparts after data showing growth in economies from China to the U.S. boosted demand for higher- yielding assets.
The Norwegian krone and Australian dollar, currencies linked to global expansion, were the top performers versus the greenback after reports showed manufacturing accelerated in the U.S. and China. U.S. companies added more jobs than forecast last month, and Australia’s economy grew in the second quarter at the fastest pace in three years. A report next week may show the U.S. trade gap narrowed.
“We’ve certainly seen rays of sunshine as far as risk sentiment is concerned,” said Vassili Serebriakov, a currency strategist at Wells Fargo & Co. in New York. “You get a sense that growth in Asia is slowing from very strong levels but remains firm, and the U.S. growth is very modest but the economy should be steering clear of a double-dip recession.”
The dollar fell 1.1 percent to 84.31 yen yesterday, from 85.22 yen on Aug. 27, in its third straight weekly drop, the longest slide in two months. The greenback weakened 1 percent to $1.2896 per euro. The yen was little changed versus the European currency after rising in each of the previous three weeks.
Norway’s krone strengthened 2.1 percent versus the greenback, ending a string of three weekly losses, and the Australian currency climbed 2 percent. Norway is the world’s seventh-largest oil exporter, and Australia exports raw materials including iron and coal.
Stocks climbed as investors’ appetite for risk increased. The Standard & Poor’s 500 Index rose 3.8 percent this week, gaining for the first time in a month.
Euro Advances
The euro rose for a fourth day against the dollar yesterday, the longest winning streak in five weeks, as U.S. Labor Department data showed payrolls that exclude government jobs climbed by 67,000 positions. They gained a revised 107,000 jobs in July, more than initially estimated, the report said. The median estimate in a Bloomberg survey was a gain of 40,000. Overall payrolls shed 54,000 jobs, compared with a forecast for a drop of 105,000.
A week earlier, the Commerce Department reported U.S. economic growth slowed to an annual pace of 1.6 percent in the second quarter, from 3.7 percent from January through March.
“The economic numbers have been bad as of late, so the double-dip recession idea has been gaining ground -- today’s number changes that,” Tim O’Sullivan, chief trader at FOREX.com, said yesterday. The firm is a unit of the online currency trading company Gain Capital in Bedminster, New Jersey.
Australian High
The Australian dollar reached its highest level versus the greenback yesterday, 91.76 U.S. cents, since Aug. 9. Australia’s economy grew 1.2 percent in the second quarter after a revised 0.7 percent gain in the previous period, the Bureau of Statistics reported.
The Aussie also rose as China’s manufacturing purchasing managers’ index increased to 51.7 in August, more than forecast, from 51.2 in July, the Federation of Logistics and Purchasing said this week. China is Australia’s biggest trading partner.
The Swiss franc fell from a record high against the euro after U.S. manufacturing grew more than expected, damping appetite for haven currencies. The franc touched 1.3163 per euro yesterday, the weakest since Aug. 24, after touching 1.2852 on Aug. 31, the most since the shared currency debuted in 1999.
The Institute for Supply Management’s factory index, a gauge of U.S. manufacturing, unexpectedly rose to 56.3 in August from 55.5 in July, the Tempe, Arizona-based group said Sept. 1.
‘String of Such Data’
“We’ve seen a bit of better-than-anticipated news over the past week, but one number doesn’t change the overall picture,” said John McCarthy, director of currency trading at ING Groep NV in New York. “We need to see a string of such data before the tenor of the market changes.”
The U.S. trade deficit narrowed to $47 billion in July from $49.9 billion the previous month, according to the median estimate of 60 economists in a Bloomberg Survey. The Commerce Department will report the data Sept. 9.
The yen gained versus the dollar this week amid speculation that moves to increase credit-easing measures in Japan won’t curb the currency’s surge. It has gained 14 percent this year, the most among 10 developed-world counterparts, as investors sought it as a haven, Bloomberg Correlation-Weighted Currency Indices show. It touched a 15-year high, 83.60 per dollar, Aug. 24. A strong currency hurts Japanese exporters’ competitiveness.
Prime Minister Naoto Kan said this week the nation is preparing a 920 billion yen ($10.8 billion) stimulus plan, and the Bank of Japan added 10 trillion yen in liquidity injections.
“Japanese officials are really at a loss and have little confidence,” Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York, wrote in a note to clients. “Part of the argument is that it would be fighting the tide and market forces.”
Central banks intervene in foreign-exchange markets by buying or selling currencies to influence exchange rates. Japan hasn’t intervened since 2004.
To contact the reporter on this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net
Rate These Stories
Rate this Page