Singapore dollar soars as central bank adjusts trading band
By Deborah Levine and William L. Watts, MarketWatch
NEW YORK (MarketWatch) — The dollar pared gains against the euro and fell against the Japanese yen Thursday, while the dollar index rebounded from its lowest level since December 2009.
The greenback lost a little ground after a pair of U.S. economic reports showed that jobless claims unexpectedly increased and wholesale prices rose.
The dollar index (DXY 74.89, -0.09, -0.12%) , which measures the greenback against a basket of six currencies, traded at 74.889 after earlier dipping as low as 74.617, its lowest level since December 2009. The index was down slightly from 74.966 in late North American trading Wednesday.
The yen tends to be the most sensitive to changes in the U.S. economic outlook, as investors try to gauge how the Federal Reserve will view data for its monetary-policy outlook. For Japan, monetary policy is expected to remain exceptionally loose for a long time.
Against the Japanese yen, the dollar bought ¥83.14 (USDYEN 83.1300, -0.7200, -0.8585%) , down from ¥83.89 Wednesday.
The British pound (GBPUSD 1.6327, +0.0066, +0.4058%) rose to $1.6339 from $1.6274 in late trading Wednesday.
The U.S. Labor Department said 412,000 Americans filed first-time jobless claims in the latest week, while economists expected the number to drop to 380,000. See story on jobless claims.
A separate report showed U.S. producer prices rose a seasonally adjusted 0.7% in March, a little less than economists expected. The core rate, which excludes the volatile food and energy categories, rose 0.3%, more than forecast. Read about PPI.
There “is nothing here to change a view that the yen will be the beneficiary of any data that pushes Fed hikes further into the future,” said Alan Ruskin, global head of G-10 FX strategy at Deutsche Bank.
Greece, Ireland
The euro came under pressure earlier amid renewed worries that Greece and maybe Ireland could restructure their debt.
The euro (EURUSD 1.4428, -0.0012, -0.0831%) slipped to $1.4428 from $1.4448 late Wednesday.
Greek government-bond yields and spreads on Greek sovereign credit-default swaps soared after German Finance Minister Wolfgang Schaeuble was quoted as telling Germany’s Die Welt newspaper that Greece may need to take “further measures” if a June audit finds the nation’s debt burden isn’t sustainable. Read about Greek CDS spreads, Schaeuble.
“The news flow has done its part to prompt a rise in the peripheral debt risk premium and in turn take the euro down from its recent high,” said strategists at Brown Brothers Harriman. “Greek yields have been flaring up in the past couple of days amid concerns over the possibility of restructuring.”
Greece’s five-year CDS spreads are implying a 60% chance of default, according to the firm.
Australia, China, Singapore
In the Asian trading session, the Australian dollar gained again, then pared its rise, with bulls cautiously testing territory uncharted since the Australian currency was allowed to float freely in the early 1980s. Read about prospects for the Australian dollar.
The Australian dollar (AUDUSD 1.0501, +0.0008, +0.0762%) slipped to $1.0511 after rising as high as $1.0544 earlier. It was at $1.0506 late Wednesday.
Chinese economic data on gross domestic product, inflation and retail sales due Friday may play a big role in setting the Aussie's course.
A report Thursday said China’s March consumer-price index rose more than analysts expected. Read about Chinese CPI.
Also stealing attention in currency markets, the Singapore dollar jumped by the most in three weeks against the U.S. currency after the Monetary Authority of Singapore tightened policy Thursday and raised the Singapore unit’s trading range. Read more on Singapore tightening.
The U.S. dollar fell 0.5% to S$1.2483 after trading as low as S$1.2457, according to FactSet Research data.
“This is a modest adjustment in the currency in the face of a runaway economy and un-Singaporean inflation rate [of more than 5%],” said Kit Juckes, head of forex strategy at Societe Generale. “But it puts MAS with a range of central banks who are losing or have lost the battle to contain their economies by other means and are letting their currency appreciate.”
