Euro Is Little Changed Before ECB Decision; Aussie Drops on JobsLucy Meakin and Kevin Buckland
The euro was little changed versus the dollar and yen before the European Central Bank announces its monthly monetary policy decision.
A dollar gauge was about 0.3 percent from the highest since September before data economists said will show U.S. growth slowed last quarter. Australia’s dollar dropped against all but one of its 16 major peers after a report showed employment rose less than analysts predicted. Norway’s krone slid as manufacturing fell. The euro halted a five-day drop versus nine developed-market counterparts yesterday. ECB President Mario Draghi is due to speak after the central bank’s decision.
“We had some speculation about a rate cut but this is fading more and more,” said Lutz Karpowitz, a senior currency strategist at Commerzbank AG in Frankfurt. “They don’t have to cut rates. They could also do some other liquidity-providing measures. If the ECB really doesn’t change anything today it should be euro positive.”
The euro traded at $1.3510 at 12:01 p.m. London time after rising 0.3 percent yesterday. The common currency was at 133.33 yen. The dollar was also little changed, at 98.69 yen.
The Bloomberg U.S. Dollar Index, which tracks the greenback against 10 major currencies, was at 1,014.12 after climbing to 1,017 on Nov. 4, the highest since Sept. 18.
The ECB will leave its main refinancing rate at a record-low 0.5 percent today, according to 67 of 70 economists surveyed by Bloomberg News. Bank of America Corp., Royal Bank of Scotland Group Plc and UBS AG predict the central bank will reduce borrowing costs by 25 basis points.
ECB staff forecasts for growth and inflation are scheduled for publication in December. Under Draghi’s predecessor, Jean-Claude Trichet, those factors traditionally provided the justification for a shift in interest rates.
“It’s extremely likely there will be a rate cut in December,” Yannick Naud, a money manager at Glendevon King Ltd. in London said on Bloomberg Television’s “On The Move” with Manus Cranny. “Cutting the interest rate will not be a boost to the economy, but what we will see is that there will be an effect on euro-dollar or euro-yen. Mario Draghi has to do everything to lower the euro because the recovery in Europe will come from exports.”
Euro-area gross domestic product shrank 0.3 percent this year, improving from a 0.7 percent decline in 2012, according to the median of analyst estimates compiled by Bloomberg. Economists predict the region will grow 1 percent in 2014.
The euro has strengthened 5.5 percent this year, the best performer among 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar has advanced 2.7 percent and the yen has slumped 11 percent.
The pound was little changed after the Bank of England kept its key interest rate and bond-buying target unchanged, as predicted by all analysts surveyed by Bloomberg News.
Sterling traded at $1.6072. It was at 84.05 pence per euro after appreciating to 83.79 pence yesterday, the strongest level since Oct. 3.
U.S. GDP grew at a 2 percent annualized rate in the third quarter, down from 2.5 percent in the previous three months, economists surveyed by Bloomberg News said before the data due today. Nonfarm payrolls rose by 120,000 last month after a 148,000 gain in September, a separate Bloomberg survey indicated before the Labor Department data tomorrow.
“If we get a weak payrolls number, the dollar could weaken back to the 97 yen level,” said Yasuhiro Kaizaki, vice president of global markets in New York at Sumitomo Mitsui Trust Bank Ltd. “But if it’s a strong number, I doubt we’ll be able to test 100 yen again, at least for now.”
Australia’s dollar slid after a government report showed employers added 1,100 jobs in October. Economists forecast a gain of 10,000 workers, according to the median response in a Bloomberg survey.
“We still expect employment to remain weak and the unemployment rate to rise in the months ahead, given that growth remains below trend,” said Martin Whetton, a Sydney-based interest-rate strategist at Nomura Holdings Inc. “The market reaction to the jobs data was an immediate selloff in the Aussie dollar.”
The Australian currency dropped 0.4 percent to 94.90 U.S. cents.
Norway’s krone slid after a report showed manufacturing production fell 0.2 percent in September from a month earlier. The median estimate of economists surveyed by Bloomberg called for a 0.7 percent gain.
The krone weakened 0.4 percent to 5.9798 per dollar. It also slid 0.4 percent against the euro, to 8.0774.