The dollar fell against 15 of its 16 most-traded counterparts as signs that manufacturing is expanding in the world’s two largest economies weighed on demand for haven assets.
The greenback weakened for a fourth day against New Zealand’s dollar before data forecast to show U.S. manufacturing grew at the fastest pace in six months after reports released this month showed gains in gauges for China and India. Australia’s dollar advanced as Asian stocks rose and crude oil gained, boosting demand for higher-yielding assets.
“If the world economy, in particular the key Asian economies, can avoid a really sharp slowdown in growth, some of the currencies that are more sensitive to that global story are probably going to hold up fairly well,” said Jonathan Cavenagh, a currency strategist in Singapore at Westpac Banking Corp., Australia’s second-largest lender. “The risk is obviously that you start to see the U.S. dollar come under a little bit of pressure.”
The dollar fell 0.3 percent to $1.2978 per euro as of 12:47 p.m. in Singapore from yesterday. It declined 0.7 percent to 78.37 cents against the New Zealand dollar and 0.6 percent to $1.0291 against Australia’s currency. The greenback fetched 76.83 yen from 76.90 yesterday. The euro gained 0.2 percent to 99.70 yen from 99.46 yesterday, when it fell as low as 98.66, the weakest since December 2000.
U.S. Manufacturing
The Institute for Supply Management’s factory index (NAPMPMI) for the U.S. probably rose to 53.4 last month, economists in a Bloomberg News survey forecast before the figures are released today. That compares with a reading of 52.7 in November and would be the highest level since June. Readings above 50 indicate expansion.
Data from the Commerce Department due tomorrow may indicate bookings for factory goods (TMNOCHNG) climbed 2 percent in November after a 0.4 percent drop the previous month, according to a separate survey.
“In the immediate future, we will be looking for solid outcomes” in U.S. data, said Greg Gibbs, a foreign-exchange strategist at Royal Bank of Scotland Group Plc in Sydney. This will “provide a bit of support for other riskier currencies.”
China, India
In China, a manufacturing purchasing managers’ index rose to 50.3 in December from 49 the prior month, the Beijing-based logistics federation said Jan. 1. The reading exceeded all forecasts in a Bloomberg News survey of 15 analysts in which the median estimate was 49.1. An index on services released today climbed to 56 last month from 49.7 in November.
India’s Purchasing Managers’ Index for manufacturing grew at the fastest pace in six months, HSBC Holdings Plc and Markit said in an e-mailed statement yesterday.
The dollar has depreciated 0.4 percent today, the worst performer among the 10 developed nations tracked by Bloomberg Correlation-Weighted Indexes. The greenback gained 1.1 percent last year, its first advance in three years.
The euro was the worst performer last year among the 10 currencies tracked by the indexes, sliding 2 percent against its peers.
Gains in the euro against the yen were limited on concern the European debt crisis will hamper economic growth in the region.
European Contraction
European services and manufacturing output probably contracted for a fourth month in December, according to the median estimate of economists polled by Bloomberg News before a report from London-based Markit Economics tomorrow. The data is expected to confirm that a euro-area composite index (ECPMICOU) based on a survey of purchasing managers rose to 47.9 in December from 47 in November, below the 50 that indicates contraction.
“This really puts them in a difficult position trying to control their budgets with weak growth and also being forced to conduct austerity measures,” said RBS’s Gibbs. “You would continue to see the euro under some pressure.”
European inflation declined from a three-year high in December, a report tomorrow is predicted to show according to a separate Bloomberg poll. The inflation rate (ECCPEST) in the 17-nation euro area fell to 2.8 percent in December from 3 percent in the previous month, the European Union’s statistics office in Luxembourg is forecast to say.
To contact the reporters on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net; Kristine Aquino in Singapore at kaquino1@bloomberg.net
To contact the editor responsible for this story: Garfield Reynolds at greynolds1@bloomberg.net
