BLBG:Dollar Set For Monthly Gain Before U.S. Spending Report
The dollar headed for a monthly advance versus the yen before U.S. data forecast to show consumer spending rose the most since February.
The greenback maintained a gain from yesterday against the majority of its peers as investors weigh whether Federal Reserve Chairman Ben S. Bernanke will signal a new round of bond buying when he speaks in Jackson Hole, Wyoming tomorrow. The euro was 0.5 percent from the highest level in eight weeks versus the yen after European Central Bank President Mario Draghi said it’s in Germany’s interest to consent to extraordinary steps to preserve the single currency.
“The market is scaling back its expectations a little bit for another clear signal of imminent policy easing as early as this week,” said Ray Attrill, global co-head of foreign- exchange strategy at National Australia Bank Ltd. (NAB) in Sydney. “That’s why the dollar is just a little bit firmer.”
The dollar traded at 78.63 yen as of 7:13 a.m. in London after gaining 0.3 percent to 78.71 yesterday. It was at $1.2555 per euro following a 0.3 percent advance to $1.2530 in New York. Europe’s shared currency was at 98.73 yen from 98.62. It climbed to 99.18 yen on Aug. 21, the strongest since July 5.
The greenback has advanced 0.6 percent versus its Japanese peer since July 31, while it has lost 2 percent against Europe’s shared currency. The euro has climbed 2.7 percent versus the yen.
U.S. consumer spending probably rose 0.5 percent in July from a month earlier, the most since February, according to the median estimate of economists in a Bloomberg News survey. The Commerce Department releases the figure today.
Easing Soon
The Fed will announce more monetary easing “relatively soon” even if Bernanke fails to indicate additional measures in his speech tomorrow, Pacific Investment Management Co.’s Bill Gross said yesterday in a Bloomberg Television interview. Stimulus measures “will produce limited results,” said Gross, who runs the Pimco Total Return Fund, the world’s biggest bond fund with $270 billion of assets.
The dollar has weakened 1.3 percent in the past month while the yen decreased 1.9 percent, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-market currencies. The euro added 1.3 percent amid speculation the ECB will resume buying sovereign bonds to stem Europe’s debt crisis.
Demand for the euro increased after Draghi used the pages of German weekly Die Zeit yesterday to plead for a more expansive central bank role and to say the crisis-struck currency can be stabilized without sacrificing each country’s independence to a unified European political system.
Draghi Plea
“A new architecture for the euro area is desirable to create sustained prosperity for all euro-area countries, and especially for Germany,” Draghi wrote. “Yet this new architecture does not require a political union first. Economic integration and political integration can develop in parallel.”
Draghi signaled on Aug. 2 that the central bank intends to join forces with governments to acquire bonds in sufficient quantities to lower borrowing costs, while conceding Germany’s Bundesbank has reservations about the plan. He will give a media briefing on Sept. 6 after a meeting of policy makers.
“Expectations for the ECB are stronger than those for the Fed,” said Koji Iwata, vice president of foreign-exchange trading in New York at Mizuho Corporate Bank Ltd., a unit of Japan’s third-biggest financial group by market value. “We can say that’s why the euro remains stronger than other currencies.”
Euro Ichimoku
While Europe’s shared currency has risen above the so- called cloud between the first and second leading span lines on its daily ichimoku chart, “it would take a close above the 200- day average to clearly signal that the trend is changing,” Barclays Plc technical analysts led by Jordan Kotick wrote in a note to clients yesterday.
The euro’s 200-day moving average was at $1.2863. Ichimoku charts are used to predict a currency’s direction by analyzing the midpoints of historical highs and lows.
Australia’s dollar weakened against all of its 16 major counterparts after a government report showed home-building approvals declined 17.3 percent in July from a month earlier, the largest decrease since November 2002.
“The Aussie dollar has been far from closely resembling the fundamentals for quite some time,” said Gavin Stacey, chief rate strategist in Sydney at Barclays Plc. “The market seems to be playing a little bit of catch-up” after poor domestic data, he said.
The so-called Aussie dropped to $1.0318, the lowest since July 26, before trading at $1.0332, down 0.2 percent from yesterday’s close.
To contact the reporters on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Kristine Aquino in Singapore at kaquino1@bloomberg.net
To contact the editor responsible for this story: Garfield Reynolds at greynolds1@bloomberg.net
