Dollar Falls From Three-Month High as Rally Fades; Aussie Gains

The dollar fell after touching its strongest level versus the euro since December as European leaders debate loosening the shackles on national budgets to address economic weakness amid the region’s debt crisis.

The yen gained against the greenback after trading at almost the weakest since August 2009 as the lower house of parliament endorsed Haruhiko Kuroda, an advocate of increased stimulus, as the next central bank governor. Australia’s dollar climbed to a one-month high after a report showed payrolls rose to the highest in almost 13 years. The pound rose after this week touching its weakest level since 2010.

“People have perhaps become a bit leery of selling the euro and selling the pound at such low levels, and that perhaps accounts for some of the snap back,” Andrew Wilkinson, chief economic strategist at Miller Tabak & Co. in New York, said in a telephone interview. “The Aussie dollar is benefiting from an extremely strong employment report.”

The dollar fell 0.3 percent to $1.3005 per euro at 5:07 p.m. in New York, after touching the strongest level since Dec. 10. The greenback was little changed at 96.11 per yen, after depreciating to 96.71 on March 12, the weakest level since August 2009. The yen lost 0.3 percent to 124.99 per euro.

Pound Gains

The pound rallied 1.1 percent to 1.5083 per dollar. It reached 1.4832 on March 12, the least since June 2010.

“There’s also been some pretty heavy interest in sterling,” said Brad Bechtel, managing director at Faros Trading LLC in Stamford, Connecticut said in a telephone interview. “Given the force of the dollar selling, it’s really sterling-dollar that’s leading the charge.”

Norway’s krone fell the most in three weeks against the euro after central bank Governor Oeystein Olsen said in a statement that “the key policy rate may be kept low for longer than previously anticipated.” The Norges Bank kept its overnight deposit rate at 1.5 percent today, a decision that was forecast by all 16 economists surveyed by Bloomberg News.

The krone slumped 1.2 percent to 7.5339 per euro, posting the biggest decline since March 14, 2012.

The rand gained for the first time in four days, rebounding from a four-year low against the dollar, after manufacturing growth beat analysts’ estimates and mining output unexpectedly increased.

South Africa’s currency strengthened 0.9 percent to 9.1748 per dollar.

Japan Policy

Japanese lawmakers in the lower house, which is dominated by the ruling coalition, also approved Abe’s nominees Kikuo Iwata and Hiroshi Nakaso for the two deputy governor posts. The upper house, where Abe’s Liberal Democratic Party lacks a majority, is scheduled to vote tomorrow.

The Bank of Japan will be determined to get inflation toward its 2 percent target and that “will undermine the yen,” said Derek Mumford, a director at Rochford Capital, a currency risk-management company in Sydney. “We can see dollar strength for another three or four weeks -- I wouldn’t stand in front of this decisive market.”

Australia’s dollar rose against most of its 16 of its major counterparts as the statistics bureau said the number of people employed rose by 71,500 in February from the previous month, when it increased 13,100. That compared with a 10,000 increase estimated by economists in a Bloomberg survey.

Aussie Strength

“It’s a very strong employment number, and somewhat surprising given the challenges the Australian employment market is facing,” said Richard Grace, chief foreign-exchange strategist and head of international economics at Commonwealth Bank of Australia in Sydney. “The market that was primarily short the Australian dollar is now unwinding.”

Interest-rate swaps data compiled by Bloomberg show traders see a 7 percent chance the central bank will lower its benchmark to 2.75 percent at its next meeting on April 2. That’s down from 19 percent odds yesterday.

The Aussie rose 0.8 percent to $1.0384, after climbing to $1.0399, the strongest level since Feb. 6. The currency added 0.8 percent to 99.80 yen.

First-time U.S. jobless claims fell by 10,000 to 332,000 in the week ended March 9, the fewest since mid-January, according to data today from the Labor Department in Washington. The median forecast of 49 economists surveyed by Bloomberg called for an increase to 350,000. The four-week average declined to a five-year low.

The Dollar Index, which Intercontinental Exchange Inc. uses to track the greenback against currencies of six U.S. trading partners, fell 0.4 percent to 82.591, after rising to the highest level since Aug. 3.

Economic Reading

“The data that we’ve seen recently has been really surprising to the upside, and the U.S. dollar has been responding positively to that,” said Eric Viloria, a senior currency strategist at Gain Capital Group LLC in New York

The gauge is forecast to decline to 81.6 by the end of year, according to the median forecast of economists surveyed by Bloomberg.

German Chancellor Angela Merkel went into a European Union summit today urging a stepped-up fight against youth unemployment, now over 50 percent in Greece and Spain, and skipped the appeal to fiscal discipline that has been her standard message throughout the debt crisis.

The euro zone’s continued economic slump has shoved aside the financial crisis as the bloc’s biggest headache, leading the EU to push back deficit-reduction deadlines and making it perilous for politicians to wrap themselves in the flag of austerity.

The euro has gained 1.5 percent this year among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar rose 3.1 percent and the yen lost 8 percent.

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