The euro strengthened the most in two weeks against the dollar after European Central Bank President Mario Draghi refrained from announcing any additional stimulus measures that tend to debase a currency.
The 18-nation currency reached a one-week high after Draghi said both upside and downside inflation risks remained limited. The dollar rose against the yen before a nonfarm payrolls report tomorrow that is forecast to show jobs growth rebounded in January. Australia’s dollar climbed to a three-week high after the nation reported an unexpected trade surplus. Hungary’s forint and Turkey’s lira advanced.
“You’ve got Draghi’s reiteration that he’ll support the economy and so there’s some positive reaction on euro-dollar,” Fabian Eliasson, head of U.S. currency sales in New York at Mizuho Financial Group Inc., said in a phone interview. “The market is anticipating payrolls to be a bit on the positive side.”
The euro advanced 0.4 percent to $1.3590 at 5 p.m. New York time, the biggest gain since Jan. 23. The single currency rose 1.1 percent to 138.76 yen, after dropping to 136.23 yen on Feb. 4, the weakest level since Nov. 22. The dollar rose 0.7 percent to 102.11 yen.
Emerging-markets currencies rose for a third day, while the yen retreated, as assets in those regions stabilize after central banks from Turkey to India raised interest rates to halt foreign-exchange weakness.
The lira advanced 1.3 percent to 2.2097 versus the greenback, leading gains among emerging-market currencies as banks offered the highest rate on savings after a doubling of central bank rates last month.
“The market has started to appreciate the impact of the central bank’s interest-rate increase,” Ugur Kucuk, a fixed-income strategist at IS Investment Securities in Istanbul, wrote in e-mailed comments. “Together with the fading of the panic selloff in emerging markets, the lira debt looks attractive.”
Hungary’s forint strengthened after it sold more bonds than planned at a higher borrowing costs. The currency rose 0.8 percent to 307.15 per euro.
Australia’s dollar extended a second weekly advance after the statistics bureau said exports exceeded imports by A$468 million ($420 million) in December. Economists had forecast a shortfall of A$200 million.
The currency surged 2 percent on Feb. 4, the biggest gain since June, after the Reserve Bank of Australia dropped its reference to the currency being too strong.
“Things are changing in Australia,” said Steven Saywell, global head of foreign-exchange strategy at BNP Paribas SA in London. “The market has been talking about the very strong data out of Australia overnight. The real surprise this week was the RBA when they removed their easing bias. That removes a bearish factor for the Australian dollar.”
The Aussie climbed 0.6 percent to 89.59 U.S. cents after advancing to the highest level since Jan. 14.
The euro strengthened 5.6 percent in the past year, the third-best performer of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar gained 4 percent, while the yen weakened 5.6 percent.
Draghi, speaking at a press conference in Frankfurt, signaled officials will wait until next month before deciding whether to cut interest rates further as money markets stabilize and the economy shows some signs of recovery.
“We remain firmly determined to maintain the high degree of monetary accommodation and to take further decisive action if required,” Draghi said. “We firmly reiterate our forward guidance. We continue to expect the key ECB interest rates to remain at present or lower levels.”
“Draghi is pushing back on anything that points to the ECB taking more action,” said Gavin Friend, a foreign-exchange strategist at National Australia Bank Ltd. in London. “Draghi says further analysis on the medium-term price stability outlook will be available next month. The euro is up as some will see this as a signal any policy action will have to wait until then.”
The Bloomberg Dollar Spot Index dropped for a fourth day, falling 0.1 percent to 1,025.75.
A Labor Department report tomorrow will show U.S. employers boosted payrolls by 180,000 in January, compared with a December increase of 74,000 that was the smallest since January 2011. The unemployment rate is projected to remain at 6.7 percent, the lowest level since 2008.