Euro Rises as Growth Signs Damp ECB Stimulus Bets; Krona Gains

The euro strengthened for a third day against the dollar after a German report showed unemployment fell more than economists forecast, adding to signs the region’s recovery is gathering momentum.

The 18-nation common currency climbed to a two-week high versus the yen as a measure of Spanish manufacturing also increased, damping speculation the European Central Bank will boost stimulus when it meets April 3. Sweden’s krona rallied for a second day on factory output that unexpectedly accelerated. South Africa’s rand fell as manufacturing growth slowed more in March than economists predicted. South Korea’s won rose to the strongest in six weeks as exports increased.

Europe’s data “were a little bit better than expected -- it plays into the euro grinding higher than yesterday’s high,” Richard Franulovich, chief currency strategist for the northern hemisphere at Westpac Banking Corp., said in a phone interview. “But no one wants to push euro/dollar higher before the ECB meeting. It’s likely the ECB will have some unconventional easing measures in the next three months.”

The euro rose 0.2 percent to $1.3793 at 5 p.m. in New York, after gaining 0.2 percent during the previous two days. It reached $1.3815, topping yesterday’s high of $1.3809. The shared currency appreciated 0.6 percent to 142.97 yen after climbing to 143.07 yen, the highest level since March 13. The dollar strengthened 0.4 percent to 103.65 yen after reaching 103.71, highest since March 7.

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major counterparts, was little changed at 1,015.77.

Winners, Losers

New Zealand’s currency gained 5.5 percent against the greenback in the first quarter, the most of the dollar’s 16 major peers. Brazil’s real rallied 4 percent and the Australian dollar climbed 3.9 percent. Canada’s dollar, known as the loonie, fell the most, dropping 3.9 percent. Taiwan’s currency weakened 2.2 percent and South Korea’s won dipped 1.4 percent.

The krona rose versus all but three of its 16 major counterparts after Stockholm-based Swedbank AB said its index of Swedish factory output increased to a seasonally adjusted 56.5 last month from 54.6 in February. A level above 50 indicates expansion.

The Swedish currency climbed 0.3 percent to 6.4548 versus the dollar and added 0.1 percent to 8.9028 per euro.

The rand snapped a six-day advance after South Africa’s Kagiso Tiso Holdings said its measure of the nation’s factory output fell to 50.3 from 51.7 in February. The median prediction in a Bloomberg survey was 51.2.

The South African currency weakened 0.5 percent to 10.5822 per dollar after appreciating 3.4 percent in the prior six days.

Won, Aussie

South Korea’s won gained for a fifth day, adding 0.6 percent to 1,058.70 per dollar at the close in Seoul, the strongest level since Feb. 17.

Overseas sales for the Asian nation climbed 5.2 percent in March from a year earlier, beating the 4.2 percent gain projected in a Bloomberg survey.

Australia’s dollar reached a four-month high after the Reserve Bank held interest rates at a record-low 2.5 percent. It reversed gains after Governor Glenn Stevens said the currency’s recent climb will reduce the stimulus provided to the economy.

The Aussie gained as much as 0.4 percent to 93.04 U.S. cents, the strongest since Nov. 21, before weakening 0.2 percent to 92.47.

The pound fell for the first time in seven days versus the dollar after a U.K. purchasing managers’ index declined to 55.3, the lowest since July, from a revised 56.2 in February, Markit Economics said. The median estimate in a Bloomberg News survey was for a reading of 56.7.

Sterling fell 0.2 percent to $1.6630 after gaining more than 1 percent the previous six days, its longest winning streak since July.

‘Stronger Euro’

The euro gained as the number of people out of work in Germany dropped by a seasonally adjusted 12,000 in March to 2.9 million, after falling a revised 15,000 the previous month, the Federal Labor Agency said. Economists forecast a decline of 10,000, according to a Bloomberg survey.

A gauge of Spanish factory output increased to 52.8 from 52.3, Markit Economics said, citing a survey of purchasing managers.

“The euro definitely remains supported, because the data wasn’t horrible,” Brad Bechtel, managing director at Faros Trading LLC in Stamford, Connecticut, said in a telephone interview. “The market isn’t really looking for a move from the ECB anymore, or they’ve taken back some of that expectation.”

Policy makers meeting in Frankfurt in two days will keep the benchmark interest rate at a record-low 0.25 percent, according to all but three of 57 economists in a Bloomberg News survey. One forecaster predicted a cut to 0.1 percent while two called for 0.15 percent.

The euro has rallied 8.1 percent in the past 12 months, the best performer after the pound among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar dropped 0.3 percent and the yen tumbled 11 percent.

To contact the reporters on this story: John Detrixhe in New York at jdetrixhe1@bloomberg.net; Andrea Wong in Washington at awong268@bloomberg.net

To contact the editors responsible for this story: Dave Liedtka at dliedtka@bloomberg.net Kenneth Pringle

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