The dollar strengthened and Treasuries gained before President Barack Obama and Federal Reserve Chairman Ben S. Bernanke speak on the U.S. economy. Australia’s currency fell after unemployment unexpectedly rose.
The dollar climbed 0.2 percent versus the euro and rallied 0.6 percent against the Aussie as of 1:53 p.m. in Tokyo. The yield on 10-year Treasuries fell two basis points. Standard & Poor’s 500 Index futures slid 0.2 percent after a 2.9 percent jump in the U.S. gauge yesterday. Asian stocks pared gains, with the MSCI Asia Pacific Index 0.2 percent higher after earlier climbing as much as 0.9 percent. Gold added 0.6 percent.
Obama will address Congress today on a $300 billion plan that includes tax cuts, infrastructure spending and direct aid to state and local governments. Bernanke will discuss the U.S. economic outlook after Chicago Fed President Charles Evans yesterday called for more stimulus. Policy makers from the euro region to Malaysia and Indonesia are forecast to join South Korea’s central bank in keeping interest rates unchanged today amid the global slowdown.
“People are getting themselves squared away and flattened out before the President’s speech,”Lincoln Ellis, managing director at the Linn Group and chief investment officer at Strategic Financial Group, said in a Bloomberg Television interview from New York. “You’re looking at the President addressing a longer-term issue with a short-term fix.”
U.S. Economy
The dollar rose 0.1 percent to 77.37 yen and traded at $1.4066 versus the euro, from $1.4098 in New York yesterday. Treasury 10-year yields decreased to 2.02 percent, after increasing six basis points to 2.04 percent yesterday. A basis point is 0.01 percentage point.
The Fed said in its Beige Book survey released yesterday the economy grew at a slower pace in some regions of the country as shoppers limited their spending and factories curbed production. Policy makers are considering three unconventional steps to boost the economy ahead of a two-day meeting this month, the Wall Street Journal reported, without citing anyone.
The S&P 500 index of U.S. shares gained the most in two weeks yesterday amid speculation Obama’s plan will stimulate growth and spur hiring amid unemployment that remains at 9.1 percent more than two years after a recession officially ended.
About five shares advanced for every three that declined on MSCI’s Asia Pacific Index, which rallied 2.2 percent yesterday. Japan’s Nikkei 225 Stock Average increased 0.3 percent and the Hang Seng Index fell 0.8 percent. Australia’s S&P/ASX 200 Index rose 0.2 percent, paring an advance of as much as 0.9 percent.
The Australian dollar fell to $1.0597, from $1.0662 late yesterday in New York, after employers unexpectedly cut workers for a second month in August. The number of people employed fell by 9,700, after a revised 4,100 drop in July, the statistics bureau said in Sydney today. That compares with the median estimate for a 10,000 increase in a Bloomberg survey.
Interest Rates
South Korea’s won was little changed at 1,072.35 per dollar. The currency erased gains of as much as 0.3 percent after the central bank held the benchmark seven-day repurchase rate at 3.25 percent for a third straight month. Malaysia’s ringgit, Indonesia’s rupiah and the Philippine peso all weakened before rate decisions in the three nations today. Economists expect no changes in borrowing costs, Bloomberg surveys show.
Demand for the euro was limited before European Central Bank policy makers meet in Frankfurt today. While all 57 economists surveyed by Bloomberg expect the ECB to leave its benchmark interest rate unchanged at 1.5 percent this meeting, traders are betting it will cut rates by 25 basis points over the next 12 months, a Credit Suisse Group AG index based on swaps showed yesterday.
Default Risk
The cost of insuring Asia-Pacific corporate and sovereign n bonds against non-payment decreased, with the Markit iTraxx Japan index dropping five basis points to 145 basis points, Deutsche Bank AG prices show. The gauge is headed for the lowest level since Sept. 1, according to data provider CMA.
The Markit iTraxx Australia index dropped four basis points to 168, Credit Agricole CIB prices show, while the Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan decreased four basis points to 154 basis points, Royal Bank of Scotland Group Plc prices show.
Oil for October delivery added 0.4 percent to $89.70 a barrel on the New York Mercantile Exchange, trimming an advance of as much as 0.9 percent. Crude jumped 3.9 percent yesterday. The industry-funded American Petroleum Institute said inventories fell 2.97 million barrels last week.
An Energy Department report today may show supplies slid 2 million barrels as Tropical Storm Lee shut output, a Bloomberg News survey of analysts show. Another cyclone, Nate, formed off Mexico, becoming the third now churning in the Atlantic basin.
Immediate-delivery gold rallied 0.7 percent to $1,829.88 an ounce. Bullion sank 4.4 percent in the previous two days after reaching an all-time high of $1,921.15 on Sept. 6.
To contact the reporters on this story: Shiyin Chen in Singapore at schen37@bloomberg.net.
To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net
