BLBG:Euro Set for First Five-Day Gain in Three Weeks on European Debt Efforts
The euro was set for its first five- day gain against the dollar in three weeks on prospects a capital backstop for European lenders will help stem the region’s debt crisis.
The 17-nation euro held yesterday’s advance versus the yen after the European Central Bank yesterday reintroduced yearlong loans for banks and before a meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy. The Australian and New Zealand dollars were set to complete weekly gains as Asian stocks rose. Losses in the dollar were limited before a U.S. report today forecast to show payrolls stagnated in September, supporting demand for refuge currencies.
The ECB’s move “is shoring up European growth prospects, and it’s shoring up European banks,” said Adam Carr, senior economist in Sydney at ICAP Australia Ltd., part of the world’s largest interdealer broker. “That is very positive euro and I would expect to continue to see the euro being bid as a result.”
The euro traded at $1.3422 as of 12:02 p.m. in Tokyo from $1.3437 in New York yesterday, having risen 0.3 percent this week. The common currency fetched 102.94 yen from 103.09 yen yesterday, when it gained 0.6 percent. The dollar bought 76.67 yen from 76.72 yen.
Australia’s dollar was at 97.67 U.S. cents from 97.46 cents, and it has strengthened 1.1 percent since Sept. 30. The New Zealand dollar traded at 77.24 U.S. cents from 77.17 cents. It has rallied 1.4 percent this week.
The MSCI Asia Pacific Index of regional shares climbed 2.1 percent. The MSCI World Index increased 2.5 percent yesterday while the Standard & Poor’s 500 Index of stocks rose 1.8 percent in New York.
Unlimited Cash
The ECB said yesterday it will reintroduce yearlong loans, giving banks access to unlimited cash through January 2013, and it will resume purchases of covered bonds to encourage lending. At the same time, the European Commission is pushing for a coordinated capital injection into banks, and Merkel said policy makers “shouldn’t hesitate” if it turns out financial institutions are undercapitalized.
Merkel is due to meet her French counterpart in Berlin on Oct. 9 for their eighth one-on-one summit in 20 months.
Losses in the dollar were limited on speculation the number of jobs added last month in the U.S. won’t be enough to curb unemployment, spurring demand for safer assets.
“The risks of a negative outcome for payrolls is certainly higher than the market is currently expecting,” said Robert Rennie, chief currency strategist in Sydney at Westpac Banking Corp., Australia’s second-largest lender. “Demand across Europe and Asia and the U.S. is slowing as well. That’s something that should benefit the U.S. dollar.”
U.S. Payrolls
U.S. payrolls grew by 55,000 workers in September and the jobless rate was unchanged at 9.1 percent, according to the median forecasts of economists surveyed by Bloomberg News before the Labor Department releases the data today. The number of workers employed was unchanged in August, last month’s report showed, compared with the median forecast for an increase of 68,000 workers.
President Barack Obama said Congress should pass his $447 billion jobs bill quickly to “guard against another downturn” in the U.S. economy if the European debt crisis worsens. He endorsed a proposal by Senate Democrats to impose a surtax of 5.6 percent on people earning at least $1 million to generate about $450 billion to pay for his plan.
Malaysia’s Ringgit
The dollar has appreciated 6 percent in the past month, the second-best performer among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen has gained 6.9 percent in the same period.
Malaysia’s ringgit rose for a fourth day ahead of data that may show the nation’s exports quickened, while bonds rose before a budget speech by Premier Najib Razak.
Export growth may have accelerated to 7.9 percent in August from 7.1 percent in July, a Bloomberg News survey showed before today’ data. In a statement yesterday, Najib said he will announce new policies to help citizens cope with rising living costs, while remaining “fiscally responsible.”
“The focus will be on the budget and if the country’s budget deficit is below 5 percent, it will be positive for the ringgit in the short term,” said Suresh Kumar Ramanathan, a currency strategist at CIMB Investment Bank Bhd. in Kuala Lumpur. “It will also take some of the external headwind pressure off the domestic economy.”
The ringgit gained 0.4 percent to 3.1641 per dollar.
To contact the reporters on this story: Monami Yui in Tokyo at myui1@bloomberg.net; Kristine Aquino in Singapore at kaquino1@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
