BLBG:Dollar Maintains Two-Day Decline on Signs of U.S. Recovery, Stock Gains
The dollar maintained a two-day decline against the euro amid signs the U.S. economy is gaining momentum and as Asian stocks extended a global rally, damping demand for haven currencies.
South Korea’s won strengthened against all of its major counterparts before data forecast to show fewer Americans filed applications for unemployment benefits. The Australian dollar slid for the first time in three days after a government report showed employers unexpectedly reduced payrolls. Demand for the euro was limited ahead of a second day of talks between Greece and bondholders on a debt-swap plan.
“The U.S. recovery is the only reason that can justify the current risk-on markets,” said Junichi Ishikawa, an analyst in Tokyo at IG Markets Securities Ltd. “When stocks are higher, investors tend to sell currencies” such as the dollar.
The greenback was little changed at $1.2857 per euro as of 2:12 p.m. in Tokyo from yesterday in New York, when it slid 1 percent, the most since Nov. 11. The yen fetched 98.68 per euro from 98.83. The U.S. currency dipped 0.1 percent to 76.76 yen. The won strengthened 0.5 percent to 1,136.40 per dollar.
The MSCI Asia Pacific Index (MXAP) of shares advanced 0.9 percent. The Standard & Poor’s 500 Index climbed 1.1 percent in New York yesterday and closed at the highest level since July.
Jobless claims in the U.S. decreased to 384,000 in the week ended Jan. 14 from 399,000, according to the median economist estimate in a Bloomberg News survey before the figures are released today. Factory output climbed 0.9 percent last month, the biggest increase since December 2010, Federal Reserve data showed yesterday.
Greek Talks
The Institute of International Finance, which represents private creditors to Greece, resumed negotiations yesterday after talks last week broke off over failure to agree with the government about how much money investors will lose by swapping their bonds. Greece could forge an agreement on a voluntary debt swap with creditors by the end of this week, one finance ministry official told reporters in Athens yesterday.
The European economy will probably contract 1.2 percent to 1.5 percent in 2012, Adam Gilmour, Citigroup Inc.’s Asia-Pacific head of foreign-exchange sales and derivatives, said in Singapore today. Gilmour said he is “quite bearish” on the common currency.
The yen has advanced 8.7 percent in the past six months, the best performance among the 10 currencies tracked by the Bloomberg Correlation-Weighted Indexes. The dollar has risen 6.7 percent, while the euro has fallen 3.7 percent.
Japan’s Finance Minister Jun Azumi today said the country will take decisive measures on excessive currency moves.
French Debt Sale
France is scheduled to auction bonds today maturing in more than a year for the first time since S&P stripped the nation of its AAA credit rating on Jan. 13. The country will offer debt whose maturities range from 2014 to 2040. Spain plans to sell as much as 4.5 billion euros ($5.8 billion) of notes and bonds maturing in 2016, 2019 and 2022 today.
“I’m very bearish about the euro, absolutely,” said Kurt Magnus, executive director of currency sales in Sydney at Nomura Holdings Inc., Japan’s biggest brokerage. “The situation in Europe is still very, very poor.”
The Australian dollar weakened against all of its 16 major counterparts after the statistics bureau said the number of people employed dropped by 29,300 in December. Economists had estimated an increase of 10,000.
“The knee-jerk reaction was to take the Aussie dollar lower,” said Mike Jones, a currency strategist at Bank of New Zealand in Wellington.
The currency lost 0.4 percent to $1.0396 and fell 0.5 percent to 79.80 yen.
New Zealand Dollar
New Zealand’s currency retreated from the highest level in 11 weeks after a statistics bureau report showed consumer prices declined 0.3 percent in the fourth quarter from the previous three-month period, when they advanced 0.4 percent.
“There are no inflation pressures in New Zealand at the moment and that means the Reserve Bank can do nothing for even longer than it intended,” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp., Australia’s second-largest lender. “It’s kiwi dollar negative and also negative for shorter-maturity yields.”
The New Zealand dollar slid 0.3 percent to 80.24 U.S. cents, after it climbed as high as 80.82 yesterday, the most since Nov. 1. It dropped 0.3 percent to 61.60 yen.
Malaysia’s ringgit rose to an 11-week high on speculation Indonesia’s credit-rating upgrade yesterday is a sign that foreign demand for emerging-market Asian assets will increase.
Indonesia won its second upgrade in five weeks as Moody’s Investors Service returned it to investment level for the first time since the Asian financial crisis in 1998.
“The overall attitude towards Asian assets is good based on the upgrading of Indonesia,” said Akira Banno, a treasury adviser at Bank of Tokyo-Mitsubishi UFJ Bhd. in Kuala Lumpur.
The ringgit appreciated 0.2 percent to 3.1025 per dollar after earlier touching 3.0965, the strongest level since Nov. 1.
To contact the reporters on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net.
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.
