BLBG:Dollar Pares Decline Against Euro After China PMI Report
The dollar pared a decline against the euro after a private report signaled manufacturing may shrink in China and before U.S. data forecast to show initial jobless claims dropped, boosting demand for U.S. assets.
Australia’s currency slid to a two-month low after a preliminary reading of an index from HSBC Holdings Plc and Markit Economics showed China’s manufacturing may contract for a fifth-straight month in March. The yen gained after Japan posted an unexpected trade surplus for February. New Zealand’s dollar slid to a one-week low after its economy grew less than economists estimated.
“The market wants to buy dollars,” said Kurt Magnus, executive director of currency sales in Sydney at Nomura Holdings Inc. “Data is pointing to lower commodity prices and you’ve got resurgent, strong numbers coming out of the United States.”
The dollar traded at $1.3232 per euro at 2 p.m. in Tokyo from $1.3216 yesterday, when it touched $1.3285, the weakest level since March 8. The yen earlier rose to 83.14 per dollar, before trading at 83.23, 0.2 percent stronger than yesterday’s close in New York. The Japanese currency was at 110.14 per euro from 110.23, after earlier rising as much as 0.3 percent. The Australian dollar dropped 0.6 percent to $1.0395, after earlier touching $1.0377, the lowest since Jan. 19.
China Manufacturing
The HSBC Flash China Manufacturing purchasing managers index fell to 48.1 in March. That’s the lowest level in four months and compares with a final reading of 49.6 for February. Figures below 50 indicate contraction. China is Australia’s biggest trading partner.
New applications for unemployment insurance payments in the U.S. probably fell by 1,000 to 350,000 in the period ended March 17, according to a Bloomberg News survey of economists before the Labor Department releases its data today. That would be the lowest since March 2008.
Pacific Investment Management Co., which runs the world’s biggest bond fund, is bullish on the U.S. dollar, the Wall Street Journal reported, citing Scott Mather, Pimco’s head of global portfolio management. Mather expects the euro to fall below $1.15 this year, with a decline to $1 possible, according to the report. He forecasts Australia’s currency will decline to 90 U.S. cents by the end of this year, the newspaper said.
Japan ‘Doing Better’
Japan’s exports exceeded imports by 32.9 billion yen ($395 million) in February, the finance ministry said today in Tokyo. Economists surveyed by Bloomberg had predicted a shortfall of 120 billion yen. Exports fell by 2.7 percent from a year earlier, less than the 6.5 percent drop projected by analysts.
“The data suggest that Japan’s economy is doing better,” said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. “From a fundamental perspective, this is likely to be positive for the yen.”
JPMorgan Chase & Co. said a short-term retracement of yen declines against the dollar may be due after yesterday’s so- called “bearish reversal” where the greenback failed to advance above a key resistance area.
“We continue to monitor the 82.85/65 support zone for confirmation of that retracement,” Niall O’Connor, a New York- based technical analyst at JPMorgan, wrote in a research note to clients today. A resistance level is an area on a chart where analysts anticipate orders to sell a currency will be grouped and a support level is an area where they expect buy orders to be clustered.
The yen’s 14-day relative strength index versus the dollar declined over the past two days after being above the 70 level that some traders see as a sign an asset may reverse direction for more than a week.
New Zealand’s gross domestic product rose 0.3 percent in the three months ended Dec. 31 from the previous quarter, when it increased a revised 0.7 percent, the country’s statistics bureau said today in Wellington. The median projection by economists was for growth of 0.6 percent.
The New Zealand dollar declined 0.8 percent to 80.93 U.S. cents. It earlier reached 80.64, the weakest since March 15.
To contact the reporters on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net; Candice Zachariahs in Sydney at czachariahs2@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
