BLBG: Dollar Weakens Versus Euro as Stocks Climb, Krona Approaches One Week-High
The dollar fell against its higher- yielding peers as stock markets climbed, reducing demand for the greenback as a haven before a report economists said will show U.S. consumer confidence rose.
The American currency slipped the most against the South African rand and Australian dollar as the Stoxx Europe 600 Index gained 1.1 percent, after falling by 0.5 percent yesterday. The euro climbed against the yen and the Swiss franc before Italy’s Senate votes on Prime Minister Mario Monti’s 30 billion-euro ($39 billion) emergency budget plan. The pound traded 0.3 percent from its strongest level since January as a report showed the U.K. economy expanded more than forecast.
“Both currencies and stocks are driven by this seemingly risk-on mode that the market has reached now,” said Ulrich Leuchtmann, head of currency strategy at Commerzbank AG in Frankfurt. Price swings may be exaggerated as trading volumes drop toward the holidays, he said.
The dollar slipped 1.1 percent to 8.1502 rand as of 6:42 a.m. New York time. It weakened 0.3 percent to $1.0139 against the so-called Aussie. The U.S. currency fell 0.2 percent to $1.3067 per euro. It has depreciated from $1.2946 on Dec. 14, the strongest level since Jan. 11.
The 17-nation European currency climbed 0.2 percent to 102.05 yen, and was 0.1 percent stronger at 1.2227 Swiss francs. The dollar was little changed at 78.09 yen.
The Thomson Reuters/University of Michigan final index of consumer sentiment rose to 68 this month, the highest since June, from 64.1 in November, according to the median estimate of 64 economists surveyed by Bloomberg News. Consumer spending grew 0.3 percent in November after increasing 0.1 percent the previous month, according to a separate survey before Commerce Department figures due tomorrow.
Euro Advance
The euro advanced against nine of 16 major peers tracked by Bloomberg. Italy’s upper house is set to vote on the budget at about 2:15 p.m. in Rome following an address to lawmakers by Monti, Senate Speaker Renato Schifani said late yesterday. The lower-house Chamber of Deputies passed the package, Italy’s third round of austerity since June, in a 402-to-75 vote last week.
European Central Bank President Mario Draghi is scheduled to hold a media briefing in Frankfurt today after a meeting of the European Systemic Risk Board. He said on Dec. 19 that lenders in the region may have “very significant” funding constraints next year and that there are “substantial downside risks” to the economy.
The euro has depreciated 2.4 percent against the dollar this year, poised for a second-straight annual drop. The yen has gained 3.9 percent versus the greenback and 6.5 percent against the shared European currency.
Favored Havens
Investors favored the dollar and the yen as havens this year as the financial turmoil in the euro region spread to bigger economies, pushing the borrowing costs of Italy, Spain and France to records relative to Germany. The Frankfurt-based ECB started buying Italian and Spanish bonds in the second half of the year as it sought to stabilize financial markets.
“I’m bearish on the euro,” said Toshiya Yamauchi, a senior currency analyst in Tokyo at Ueda Harlow Ltd., which provides foreign-exchange margin trading services. “It will take more time until we see a resolution to Europe’s debt crisis.”
The pound was 0.1 percent weaker at 83.34 pence per euro. It strengthened to 83.03 pence yesterday, the strongest level since Jan. 12.
U.K. gross domestic product expanded 0.6 percent from the previous quarter, faster than the 0.5 percent previously estimated, the Office for National Statistics said today in London. The economy stalled in the three months through June, according to new data, compared with a previous figure of 0.1 percent growth. A separate report showed the current-account deficit widened to a record in the third quarter.
To contact the reporter on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
Want to save this for later? Add it to your Queue!
