Emerging-Market Currencies Rise on U.S. Payrolls; Pound Gains

Emerging-market currencies gained for a fourth day before a U.S. payrolls report forecast to show employers added the most jobs since November, a sign the world’s largest economy will lead global growth.

The euro reached the strongest level in almost three weeks earlier versus the dollar amid speculation investors were reducing bets on the European Central Bank unveiling an asset-purchase plan. The pound rose to the highest level in four years as a gauge of U.K. manufacturing output rose more than forecast. Australia’s dollar fell for the first time in three days after data showed Chinese manufacturing stalled in April. A measure of expected currency swings fell to the lowest since 2007.

“The expectation for tomorrow’s number is stronger and data is starting to look pretty good,” Robert Sinche, global strategist at Stamford, Connecticut-based Pierpont Securities LLC, said of the payrolls report in a telephone interview. “The growth outlook is being bolstered by the data.”

A custom Bloomberg index of the 20 most-traded emerging-market currencies rose 0.1 percent to 92.3175 at 5 p.m. New York time, pushing its gain this week to 0.5 percent. The index posted a five-day streak of gains ending April 10.

The dollar rose 0.1 percent to 102.33 yen, after falling 0.4 percent yesterday. The euro was little changed at $1.3870 after advancing to $1.3889, the strongest since April 11. The common currency climbed 0.1 percent to 141.92 yen.

The Bloomberg Dollar Spot Index, which monitors the greenback against 10 major counterparts, rose as much as 0.1 percent and closed little changed at 1,008.22. It earlier fell to 1,007.18, the lowest since April 14.

Top Movers

Deutsche Bank AG’s volatility index, based on three-month options for nine major currency pairs, dropped to 5.9 percent today, the lowest since July 2007.

Germany, Italy, South Korea, China and Switzerland were among markets closed for public holidays today.

South Africa’s rand gained the most among 24 developing-market currencies tracked by Bloomberg, adding 0.4 percent, followed by the Turkish lira’s 0.3 percent climb. The Philippine peso dropped 0.04 percent and the Czech koruna fell 0.03 percent, the most among decliners.

The dollar has slid 3.1 percent in the past three months, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The yen dropped 3.4 percent and the euro fell 0.1 percent.

New Zealand’s currency led the way with a 4.2 percent gain over the period. The kiwi, nicknamed for the flightless bird of New Zealand, added 0.2 percent to 86.33 U.S. cents today after advancing 0.8 percent yesterday.

Aussie Drops

Australia’s currency erased a gain after China’s PMI edged up to 50.4 in April from 50.3 the previous month, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today. A number above 50 signals expansion.

The Aussie fell 0.1 percent to 92.74 U.S. cents after two days of gains.

Sterling gained for a sixth day versus the dollar as Markit Economics said the U.K. purchasing managers index advanced to 57.3 in April, from 55.8 the previous month. The median estimate of analysts in a Bloomberg News survey was for a reading of 55.4. A level above 50 indicates expansion.

“It’s another strong data point,” said John Hardy, the head of foreign-exchange strategy at Saxo Bank A/S in Copenhagen, referring to the manufacturing report. “We saw a breakout yesterday where sterling closed above those highest levels, finally getting clear of the $1.6820 area, so it’s open fields from here.”

The pound rose 0.1 percent to $1.6893 after climbing to $1.6920, the highest since August 2009.

Jobless Claims

The dollar gained versus the yen before data due tomorrow will show 215,000 jobs were added in April, up from 192,000 the previous month, a Bloomberg survey of analysts shows.

Jobless claims rose by 14,000 to 344,000 in the period ended April 26, the highest level since Feb. 22, Labor Department data showed today in Washington. The median forecast in a Bloomberg survey of economists called for 320,000.

Further data were mixed. Commerce Department figures showed consumer spending climbed 0.9 percent, the most since August 2009, after a 0.5 percent gain in February. Markit Economics’ final index of U.S. manufacturing was 55.4 in April from 55.5 a month earlier, the London-based group said. And the Institute for Supply Management’s factory index rose to 54.9 in April from 53.7 in the prior month, the Tempe, Arizona-based group’s report showed. Readings above 50 indicate expansion.

The U.S. currency dropped yesterday against most major peers after the Federal Reserve said it will keep interest rates at almost zero for a “considerable time” after its bond-purchasing program ends. It cut monthly bond buying to $45 billion, its fourth straight $10 billion cut, and said further reductions in “measured steps” are likely.

Inflation Rate

The European Union’s statistics office in Luxembourg said yesterday the euro region’s annualized consumer-price inflation rate was 0.7 percent last month, compared with a more-than four-year low of 0.5 percent in March.

The Portuguese government will opt for a clean exit from its bailout program, Diario Economico reported yesterday, without saying how it obtained the information. Parliamentary Affairs Minister Luis Marques Guedes said this week a strategy will be announced by the end of the day on Sunday.

“The euro strength has returned after dipping somewhat earlier in the week -- the pain is still toward higher euro-dollar, with a test of $1.40 in range,” Brian Daingerfield, a currency strategist at Royal Bank of Scotland Group Plc in Stamford, Connecticut, said by phone. The shared currency last touched $1.40 in October 2011.

ECB President Mario Draghi said last week the institution might start broad-based asset purchases if the inflation outlook worsens. The Federal Reserve yesterday said it was paring its monthly bond buying to $45 billion from $55 billion, while Bank of Japan policy makers retained plans to increase the monetary base by up to 70 trillion yen annually. ECB policy makers’ next announcement is due on May 8.

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