By Neil Dennis
Published: June 10 2010 12:01 | Last updated: June 10 2010 12:01
The euro climbed on Thursday after comments from the chairman of China’s state pension fund allayed concerns that the country might cut its reserves in the single currency.
Dai Xianglong, who oversees the $144bn National Social Security Fund, said the euro would stabilise as concerns over the eurozone’s sovereign debt crisis eased. The fund chairman also said he expected future turbulence in the dollar as a result of widening deficits in the US.
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Markets were also cheered by better-than-expected Chinese export data.
The euro climbed 0.7 per cent to $1.2070 against the dollar and was up 0.3 per cent to £0.8271 versus the pound. Against the yen, the euro climbed 0.7 per cent to Y110.12.
Meanwhile, the dollars of New Zealand and Australia were both sharply higher after the Reserve Bank of New Zealand raised its main interest rate, while strong Australian jobs growth looked likely to keep its central bank on inflation watch.
The RBNZ lifted its overnight cash rate by 25 basis points to 2.75 per cent and said “further removal of stimulus will be reviewed in light of economic and financial market developments”.
Against its US counterpart, the Kiwi dollar gained 1.6 per cent to $0.6810 and climbed 1.6 per cent versus the yen to Y62.12.
Australia’s economy added 26,900 jobs in May, beating expectations of a 20,000 increase. Also, the unemployment rate eased by 2 percentage points to 5.2 per cent, after forecasts of no change.
“These data keep the domestic recovery story alive despite obvious challenges from global growth headwinds and will keep the RBA on a hawkish footing,” said analysts at RBC Capital.
The Australian dollar climbed 1.8 per cent against its US counterpart to $0.8419, and was up 1.8 per cent versus the yen to Y76.76.
“We remain bullish on risk after the release of strong data from China, Japan and Australia,” said Hans Redeker at BNP Paribas. “Parts of the emerging market world and its related economies, such as Australia, have entered a boom requiring tighter monetary conditions.”
The currencies of Norway and Sweden were also boosted. The Nowegian krone rose 1.3 per cent against the dollar to NKr6.5401 and added 0.6 per cent versus the euro to NKr7.8881. Sweden’s krona added 1.2 per cent against the dollar to SKr7.9404 and 0.6 per cent to SKr9.5762 versus the euro.
There was little to move sterling, as the Bank of England’s midday monetary policy announcement was seen as a foregone conclusion to keep rates in place.
The pound climbed 0.5 per cent to $1.4604 against the dollar and was up 0.5 per cent to Y133.31 versus the yen.
