BS: Dollar Touches Eight-Week High Versus Euro Before U.S. Election
The dollar touched an eight-week high against the euro as U.S. voters head to the polls today to decide whether President Barack Obama or challenger Mitt Romney will guide the world’s biggest economy for the next four years.
The U.S. currency fluctuated versus the 17-nation currency on speculation whoever wins the election will press ahead with resolving the so-called fiscal cliff of federal spending cuts and tax increases. Australia’s dollar appreciated against all its 16 major counterparts after the central bank unexpectedly refrained from cutting interest rates today.
“It all depends on who wins,” said Sonja Marten, a currency strategist at DZ Bank AG in Frankfurt. “If Obama wins, that’s going to be taken as a positive sign” for the dollar, she said. “Unfortunately I think that is going to be very short-lived.”
The dollar was little changed at $1.2803 at 7:36 a.m. New York time after appreciating to $1.2764, the strongest level since Sept. 11. The U.S. currency fell 0.2 percent to 80.14 yen. The euro declined 0.2 percent to 102.59 yen.
A national poll conducted by the Pew Research Center Oct. 31-Nov. 3 showed Obama leading Republican challenger Romney 48 percent to 45 percent. The survey showed them tied at 47 percent a week ago. The final tracking poll by ABC News and the Washington Post had Obama taking a lead of 50 percent to 47 percent in a survey of 2,345 likely voters conducted Nov. 1-4.
Dollar Index
The Dollar Index (DXY), which IntercontinentalExchange Inc. uses to track the U.S. currency against those of six major trading partners, was little changed at 80.65 after gaining 1 percent over the previous three days.
The dollar has gained 0.8 percent over the past month, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The euro fell 1.3 percent and the yen declined 1.4 percent.
The euro declined against most of its major counterparts as Greek Prime Minister Antonis Samaras struggles to get the members of three-party coalition to support a package of further austerity measures, which will be voted on as soon as tomorrow.
“All this uncertainty that continues to linger is proving to be quite damaging for the euro,” DZ Bank’s Marten said. “It’s difficult to see how we can get out of this quickly.”
Spain said yesterday it is working on a review of income and spending in its welfare system as it heads toward a deficit. The country is relying on European aid for its banks and potentially seeking more to shore up its public finances.
German Orders
German factory orders fell the most in a year in September, the Economy Ministry in Berlin said today. Orders, adjusted for seasonal swings and inflation, slumped 3.3 percent from August, when they dropped a revised 0.8 percent.
“The euro is being sold as the market focuses on the risks surrounding Greece and Spain,” said Junichi Ishikawa, an analyst at IG Markets Securities Ltd. in Tokyo. “German data have been weakening and there are concerns the country may fall into a recession. You can’t buy the euro in the current environment.”
Australia’s currency rose to a five-week high against the dollar after Reserve Bank of Australia Governor Glenn Stevens and his board left the overnight cash-rate target at 3.25 percent. Twenty of 27 economists surveyed by Bloomberg forecast a cut to 3 percent.
“The RBA was expected to potentially cut rates today and they didn’t,” said Greg Gibbs, a senior currency strategist at Royal Bank of Scotland Group Plc in Singapore. “As a result the Aussie dollar rallied.”
The so-called Aussie advanced 0.7 percent to $1.0436 after rising to $1.0445, the strongest since Sept. 28. The currency gained 0.6 percent to 83.69 yen.
To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net.
To contact the editor responsible for this story:Dave Liedtka at dliedtka@bloomberg.netNI FRX NI GRE NI GER NI US NI MARKETS NI FX NI GFX NI FXMARKET NI EUR NI EXE NI GOV NI NORTHAM NI USGOV
