BW:Euro Strengthens Amid U.S. Budget-Talk Optimism; Krona Gains
The euro rose toward the strongest this month against the dollar amid speculation U.S. lawmakers will reach agreement on efforts to avoid the so-called fiscal cliff, reducing demand for safer assets.
The 17-nation currency gained for the first time in four days versus the yen as Spanish and Italian bonds rallied, fueling optimism the region’s debt crisis is easing. Sweden’s krona appreciated against all except one of its 16 major counterparts after the economy expanded more than analysts forecast last quarter. U.S. Republican House Speaker John Boehner said he was optimistic officials could avert the budget crisis “sooner rather than later.”
“There’s a bit of risk-on environment triggered by John Boehner’s comments overnight about the fiscal cliff, which is lifting the euro,” said Adam Myers, director of foreign- exchange market strategy at Credit Agricole SA (ACA) in London. “European peripheral bond yields are coming down” and that is also helping the single currency, he said.
The euro advanced 0.2 percent to $1.2983 at 6:15 a.m. in New York after rising to $1.3009 on Nov. 27, the strongest level since Oct. 31. The common currency climbed 0.2 percent to 106.56 yen after weakening 0.6 percent over the previous three days. The yen was little changed at 82.07 per dollar.
President Barack Obama said yesterday the two U.S. political parties can agree on a framework for a budget deal to prevent $607 billion of automatic tax increases and spending cuts from coming into effect in January. Treasury Secretary Timothy F. Geithner meets congressional leaders today.
Quicker Growth
U.S. gross domestic product grew at an annualized 2.8 percent in the third quarter, according to a Bloomberg News survey before the report today. The initial reading from the Commerce Department last month showed a 2 percent increase.
The Dollar Index (DXY), which is used to track the greenback versus the currencies of six U.S. trading partners, dropped for a second day, falling 0.2 percent to 80.146.
“The fiscal cliff can be a selling catalyst for the dollar,” said Kengo Suzuki, a currency strategist in Tokyo at Mizuho Securities Co., a unit of Japan’s third-largest bank by market value. “The U.S. GDP figure will be positive for risk sentiment, spurring yen selling.”
Spain’s 10-year bond yield dropped to the lowest level in eight months while similar-maturity Italian yields declined to the least in two years.
The euro has appreciated 2.4 percent in the past three months, according to Bloomberg Correlation Weighted Indexes, which track 10 developed-nation currencies. The dollar dropped 1.6 percent and the yen slid 6.1 percent.
The krona rose for a second day versus the dollar after Statistics Sweden said GDP expanded 0.5 percent in the third quarter from the previous three months. Economists surveyed by Bloomberg News forecast growth of 0.2 percent.
Sweden’s currency advanced 0.4 percent to 6.6235 per dollar and rose 0.1 percent to 8.6022 per euro.
To contact the reporter on this story: Neal Armstrong in London at narmstrong8@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
