Euro Gains With Stocks, European Bonds While Gold Drops

The euro climbed for the first time in three days versus the dollar as European stocks rose. Emerging-market currencies weakened and gold fell on the outlook for Federal Reserve stimulus and as a typhoon wreaked damage in the Philippines. U.S. shares rose to trade near a record.

The euro strengthened 0.3 percent to $1.3411 by 4:26 p.m. in New York after weakening 3.2 percent over the previous two weeks. The Stoxx Europe 600 Index added 0.3 percent and most bonds in the region rose. The Standard & Poor’s 500 Index closed 0.1 percent higher. The Philippine peso lost 0.9 percent and stocks in the nation fell the most in six weeks. Spot gold slipped 0.4 percent while Brent crude oil surged as talks to curb Iran’s nuclear program ended without a resolution.

The euro retreated last week as the European Central Bank unexpectedly cut its key interest rate and U.S. payrolls rose by almost twice as much as economists projected. Data Nov. 9 showed China’s industrial production unexpectedly accelerated last month as Communist Party leaders meet to discuss economic policy. Super Typhoon Haiyan headed for Vietnam after killing as many as 10,000 people in the Philippines. The U.S. government bond market was closed for Veteran’s Day.

“Despite the U.S. jobs data on Friday, despite the ECB rate cut, the technical factors make it seem like the euro should go higher first,” Marc Chandler, the New York-based chief currency strategist at Brown Brothers Harriman & Co., said in a phone interview. “Basically what we’re telling our clients is don’t chase the euro lower, look for a bounce to sell into.”

Currency Wars

The euro strengthened against 14 of 16 major peers. As central banks embark on a new round of monetary easing to combat faltering growth, the global currency wars are heating up again.

The ECB cut its key rate last week in a decision some investors say was intended in part to curb gains in the euro after it soared to the strongest level since 2011. The same day, Czech policy makers said they were intervening in the currency market for the first time in 11 years to weaken the koruna. New Zealand said it may delay rate increases to temper its dollar, and Australia warned its currency, known as the Aussie, is “uncomfortably high.”

Economists still predict the Fed will delay tapering its asset purchases until March even after non-farm payrolls data exceeded forecasts. Policy makers will probably pare the monthly pace of bond buying to $70 billion at their March 18-19 meeting from the current pace of $85 billion, according to the median of 32 estimates in a Bloomberg survey conducted Nov. 8. The median forecast in an Oct. 17-18 survey of 40 economists also called for a cut to $70 billion in March.

‘Worried’ Markets

“Markets are going to be worried about how quickly the U.S. is going to start removing some of its stimulus program, but I think overall economic data are being supportive of equity markets,” said Stephen Halmarick, head of investment markets research in Sydney at Colonial First State Global Asset Management, which oversees about $160 billion.

About four shares gained for each that fell in the Stoxx 600, which has risen for the past five weeks. Volumes were 22 percent below the 30-day average, according to data compiled by Bloomberg. Lonmin Plc rallied 3.9 percent as the world’s third-largest platinum producer reported profit that beat analyst estimates.

British Sky Broadcasting Group Plc, which has aired top English soccer games since the Premier League’s inception in 1992, retreated 11 percent for the biggest drop in five years as BT Group Plc won the rights to broadcast UEFA’s Champions League and Europa League tournaments. RSA Insurance Group Plc sank 11 percent after suspending three top executives at its Irish unit and saying 2013 results will miss projections.

U.S. Movers

Among U.S. stocks moving today, Transocean Ltd. added 3.6 percent after the offshore rig contractor agreed with investor Carl Icahn to propose a $3 per share dividend. ViroPharma Inc. jumped 25 percent after Shire Plc. bought the company for about $4.2 billion. Best Buy Co. rose 4.5 percent as UBS AG upgraded the stock. D.R. Horton Inc. slipped 0.4 percent as homebuilder shares dropped for a third day.

The Dow Jones Industrial Average added 0.1 percent, holding a record high as International Business Machines Corp. and Wal-Mart Stores Inc. rallied more than 1.3 percent.

The S&P 500 added 0.5 percent last week for a fifth week of gains. Better-than-projected data on jobs and U.S. gross domestic product signaled the economy is strong enough to withstand a reduction in Fed stimulus, even as consumer spending climbed last quarter at the slowest pace since 2011.

Corporate earnings that surpassed estimates and unprecedented monetary support from the Fed have propelled the S&P 500 up by more than 160 percent from a March 2009 low.

Earnings Season

Of the 447 S&P 500 companies that have released third-quarter profit so far, 75 percent have beaten analysts’ forecasts, data compiled by Bloomberg showed. Earnings per share for the companies on the gauge probably increase 4.7 percent in the third quarter, and will rise 6.2 percent in the fourth, according to estimates compiled by Bloomberg.

Wal-Mart, Macy’s Inc. and Nordstrom Inc. are among retail companies reporting earnings this week, while Home Depot Inc. posts results Nov. 19.

Investors have poured money into exchange-traded funds tracking U.S. stocks, pushing assets in the iShares Core S&P 500 ETF above the Vanguard FTSE Emerging Markets ETF for the first time since 2010. The iShares S&P 500 fund manages $50.5 billion, compared with $48.3 billion for the ETF linked to shares of developing nations, according to data compiled by Bloomberg. The SPDR S&P 500 ETF Trust is the world’s largest ETF with about $156 billion.

Philippine Stocks

The Philippine Stock Exchange Index slipped 1.4 percent, the most since Sept. 30, while the peso weakened to 43.580 per dollar. The government warned the devastation from the typhoon may adversely impact the economy. The storm weakened into a tropical depression as it reached Vietnam yesterday, with no reports of casualties. Vietnam’s VN Index gained 0.5 percent.

The Hang Seng China Enterprises Index of mainland Chinese companies listed in Hong Kong rose for the first time in five days, adding 1.9 percent. Chinese industrial production increased 10.3 percent in October from a year earlier, the nation’s statistics bureau said Nov. 9, exceeding the 10 percent median estimate in a Bloomberg survey of economists.

The Thai baht dropped 0.4 percent to 31.65 per dollar today, weakening against 15 of 17 major peers. Police tightened security around the nation’s parliament as the Senate debates a political amnesty bill that has sparked demonstrations. India’s rupee sank 1.2 percent versus the greenback.

‘Short-Term’ Negatives

“Some local factors like the typhoon and the political problems are short-term negatives,” said Yuji Kameoka, chief currency strategist in Tokyo at Daiwa Securities Co., Japan’s second-largest brokerage. “The improved U.S. data boosted appetite for the dollar as that probably led to some speculation the Fed’s tapering will begin sooner.”

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 major currencies excluding the yen, fell 0.3 percent to the lowest level since Sept. 30. The yen slipped 0.2 percent to 99.21 per dollar.

The S&P GSCI gauge of 24 commodities advanced 0.7 percent, as Brent, corn and gasoline rose more than 1 percent to drive gains. International Atomic Energy Agency chief Yukiya Amano is leading inspectors to Tehran for negotiations after talks in Geneva with the United Nations Security Council and Germany ended without an agreement to curb Iran’s nuclear program, keeping supply limits of oil from the country.

Brent Gains

Brent crude rose 1.3 percent to $106.51 a barrel. U.S. natural gas gained 0.6 percent, climbing a fifth day. Colder-than-normal weather will blanket Chicago to New York through Nov. 17, according to the U.S. Climate Prediction Center in College Park, Maryland. About 49 percent of U.S. households use natural gas for heating, government data show.

Italy’s 10-year bond yield dropped one basis point, or 0.01 percentage point, to 4.13 percent and Spain’s debt declined one basis point to 4.10 percent.

Portugal’s government bonds rose after the outlook on the nation’s rating was revised to stable from negative by Moody’s Investors Service Nov. 8 amid an improving fiscal position and economic outlook. The 10-year yield fell 14 basis points to 5.82 percent, after reaching 5.79 percent last week, the lowest level since June.