BLBG:Dollar Set for Weekly Gain Before U.S. Housing Data; Yen Slides
The dollar headed for a weekly gain versus all major peers before U.S. data next week on home prices and durable-goods orders that may add to the case for a slowdown in stimulus outlined by the Federal Reserve this week.
The yen weakened against 15 of its 16 counterparts as Asian stocks pared a slide before a speech today by Bank of Japan Governor Haruhiko Kuroda. The euro snapped a two-day decline before data today on the region’s current-account balance, which climbed to a record in March. South Korea’s won touched a one-year low after the nation’s regulator said it will strengthen monitoring of foreign-exchange markets.
“I expect the dollar to remain resilient because it’s become clear that the Fed’s policy stance is tapering,” said Yuki Sakasai, a foreign-exchange strategist at Barclays Plc in New York. The yen may weaken further as “there’s a sufficiently good chance that the Bank of Japan will have to introduce additional monetary easing.”
The dollar jumped 0.5 percent to 97.80 yen as of 6:41 a.m. in London, extending its weekly gain to 3.7 percent, the most since December 2009. The yen dropped 0.6 percent to 129.43 per euro. Europe’s 17-nation currency added 0.1 percent to $1.3236.
The yen has fallen 2.8 percent this week against the euro, poised for the biggest slide since the period ended April 5, the same week the BOJ introduced unprecedented stimulus. The euro has slid 0.8 percent against the greenback since June 14.
The MSCI Asia Pacific Index of shares was little changed after losing as much as 1.5 percent.
Fed Policy
The Federal Open Market Committee left the monthly pace of bond purchases at $85 billion on June 19, saying “downside risks to the outlook for the economy and the labor market” have diminished. Policy makers raised growth forecasts for next year to a range of 3 percent to 3.5 percent and reduced their outlook for unemployment to as low as 6.5 percent.
“If the incoming data are broadly consistent with this forecast, the committee currently anticipates that it would be appropriate to moderate the pace of purchases later this year,” Fed Chairman Ben S. Bernanke said in a press conference in Washington after the central bank meeting.
The U.S. Commerce Department is likely to say on June 25 that orders for U.S. durable goods rose 3 percent in May from April, expanding for a second month, according to the median estimate of economists in a Bloomberg News survey.
A separate report may show the same day that the S&P/Case-Shiller (SPCS20Y%) index of property values jumped 10.6 percent in April from a year earlier, according to another poll of economists. That would almost match March’s increase which was the most in seven years.
Dollar Forecast
The Dollar Index, which Intercontinental Exchange Inc. uses to monitor the greenback against the currencies of six U.S. trade partners, fell 0.2 percent to 81.773, paring a weekly advance to 1.4 percent. The gauge may climb to 85.7 by the end of the year, according to the median forecast of economists and strategists surveyed by Bloomberg.
Yields on benchmark Treasuries touched 2.47 percent yesterday, the highest since August 2011.
The European Central Bank will release data on the currency bloc’s current-account balance today. A surplus in the balance, the broadest measure of international trade, climbed to 25.9 billion euros ($34.3 billion) in March on a seasonally adjusted basis, the highest on record dating back to 1997.
“The data flow has improved a little bit, and I think that helps at the moment” for the euro, said Ray Attrill, the global co-head of foreign-exchange strategy in Sydney at National Australia Bank Ltd. “Money is returning home, particularly out of emerging markets.”
Increased Uncertainty
The won dropped 0.6 percent to 1,152.25 per dollar after touching 1,159.33, the weakest since June 2012. South Korea’s Financial Supervisory Service said yesterday market volatility and uncertainty may increase as the Fed signaled an exit from quantitative easing.
The JPMorgan Global FX Volatility Index was at 11.5 percent after touching 11.51 percent yesterday, the highest level since June 7, 2012. The average in the past year is 8.66 percent.
“Since Bernanke’s comments about the possible early stimulus exit globally investors are buying the dollar,” said Hong Seok Chan, an analyst at Daishin Economic Research Institute in Seoul. “The government could intervene if market volatility increases.”
The Bloomberg-JPMorgan Asia Dollar Index (ADXY), which tracks the region’s 10 most-active currencies, dropped 1.1 percent since June 14, the biggest weekly decline since Sept. 23, 2011. India’s rupee has led declines among its peers, sliding 3.1 percent against the greenback this week.
Trading in over-the-counter foreign-exchange options totaled $21 billion today, according to data reported by U.S. banks to the Depository Trust Clearing Corp. and tracked by Bloomberg. Volume in options on the dollar-Chinese yuan exchange rate was $18.7 billion, the largest share of trades followed by dollar-yen options at $1.1 billion.
To contact the reporter on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
