BS: Euro Falls for Fourth Day Versus Dollar as China Fuels Concern
The euro weakened for a fourth day against the dollar as China’s export growth collapsed, adding to speculation global economic growth is faltering and damping appetite for riskier assets.
The greenback and yen rose against most of their major counterparts as Germany’s economy ministry said the outlook for faster growth was fading amid the currency bloc’s debt crisis, boosting demand for the currencies as havens. The Australian dollar fell against the majority of its 16 most-traded peers on concern the slowdown in its top trading partner will deepen.
“The weaker numbers raise questions about Chinese growth momentum,” Richard Franulovich, a senior currency strategist at Westpac Banking Corp. in New York, said in a telephone interview. “It suggests Chinese growth is not yet stabilizing. That has triggered a broader risk-off move.”
The euro fell 0.3 percent to $1.2268 at 9:05 a.m. New York time, extending this week’s decline to 1 percent. The single currency dropped 0.7 percent to 96.01 yen. Japan’s currency appreciated 0.4 percent to 78.27 per dollar.
The prospect of global recovery is “fragile,” Germany’s economy ministry said in its report for August. The nation’s economy “moderately” expanded in the second quarter compared with the first quarter, it said.
Economists surveyed by the European Central Bank cut their growth projection for the region next year to 0.6 percent from 1 percent, according to the institution’s monthly bulletin released yesterday.
Doom, Gloom
“There’s plenty of doom and gloom on the growth front” pushing the euro lower, said Jane Foley, a senior currency strategist at Rabobank International in London. “Part of it can be explained by the firmer tone in the dollar, partly due to China. The euro is on the back foot.”
The euro weakened 5.3 percent in the past six months, the biggest decline among 10 developed-nation currencies tracked by the Bloomberg Correlation-Weighted Indexes. The dollar rose 2.8 percent, and the yen gained 1.8 percent.
China’s exports rose 1 percent in July from a year earlier, following an 11.3 percent increase in June, the customs bureau said in Beijing. That compared with the median estimate of economists for an 8 percent gain.
The Dollar Index (DXY), which Intercontinental Exchange Inc. uses to track the currency against those of six U.S. trading partners, advanced 0.1 percent to 82.753. The gauge has risen 0.5 percent this week.
Aussie Drops
Australia’s dollar fell from the strongest in more than four months as the Chinese data damped the outlook for the South Pacific nation’s exports.
China’s report “underlines the fragilities of the Asian economic outlook,” said Jonathan Cavenagh, a strategist at Westpac Banking Corp. in Singapore. “This makes me very cautious on the Aussie dollar at these kinds of levels and probably still suggests we’ve got a downside bias.”
Australia’s currency slid 0.5 percent to $1.0524 after rising to $1.0613 yesterday, the strongest since March 20.
South Africa’s rand was the worst performer among major currencies, losing 0.5 percent to 8.1280 per dollar.
Sweden’s krona fell earlier against the dollar after a central bank official said the Riksbank hadn’t done enough to stimulate the economy. The Dagens Nyheter newspaper cited central bank deputy governor Lars E. O. Svensson as saying the main lending rate has been too high in the last 15 years, resulting in unemployment that has been above what it would have been with a looser monetary policy.
The Swedish currency dropped as much as 0.6 percent to 6.7254 per dollar before trading little changed at 6.6867.
Norwegian Krone
Norway’s krone was little changed against the euro after the nation’s $620 billion sovereign wealth fund, Europe’s largest equity investor, said it lost 77 billion kroner ($13 billion) on its investments in the last quarter.
The krone traded at 7.28 per euro, after rising earlier as much as 0.4 percent. It fell0.3 percent to 5.9362 per dollar.
The British pound weakened for a second day against the dollar after a report showed producer prices stalled last month, boosting speculation that slower inflation will give the central bank more room to add stimulus.
The currency dropped 0.3 percent to $1.5593, having declined 0.3 percent this week. It was little changed at 78.66 pence per euro.
“The U.K. economy is in a bad place,” Paul Robinson, global head of foreign-exchange research at Barclays Plc, said in a television interview on “The Pulse” with Guy Johnson. “Growth has been very weak, the MPC has loosened policy, and all of that is a sterling negative.”
To contact the reporters on this story: Joseph Ciolli in New York at jciolli@bloomberg.net; Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
