BLBG:Dollar Index Advances Before Fed Speakers; Aussie, Kiwi Decline
The Bloomberg U.S. Dollar Index rose amid speculation Federal Reserve officials speaking today will signal policy makers are still intending to slow the pace of asset purchases that have debased the currency.
The gauge approached the highest level in a week before Fed Bank of Kansas City President Esther George and Cleveland Fed President Sandra Pianalto speak today, after New York Fed President William C. Dudley said tapering was possible this year depending on economic data. The Australian and New Zealand dollars weakened as Asian stocks declined, reducing demand for the region’s higher-yielding assets. The pound fell as a gauge of mortgage approvals rose less than economists forecast.
Markets are waiting for “more Fed comments or payrolls data, more direction on the timing of the taper,” said Jane Foley, senior currency strategist at Rabobank International in London. “Many people don’t have a strong view on that right now and they want to see what the next payrolls number will tell us before coming to a strong conclusion on the dollar.”
The Bloomberg U.S. Dollar Index, which tracks the greenback against 10 major currencies, rose 0.2 percent to 1,013.57 at 7:40 a.m. New York time after climbing to 1,014.10, matching the highest level since Sept. 18.
The U.S. currency gained 0.1 percent to $1.3483 per euro after strengthening 0.2 percent yesterday. The greenback was little changed at 98.79 yen. The euro declined 0.1 percent to 133.20 yen.
Quarterly Decline
The dollar has weakened 3.5 percent this quarter versus the euro, headed for the biggest decline since the three months through March 2011. The greenback has dropped 0.4 percent against the yen in the same period.
The Kansas City Fed’s George and Cleveland Fed’s Pianalto speak as markets assess the central bank’s stance after it unexpectedly left its bond-purchase program unchanged when officials met on Sept. 17-18.
New York Fed President Dudley said yesterday the economy “still needs the support of a very accommodative monetary policy,” and told CNBC today tapering would require improvement in the job market and economy. His Atlanta counterpart Dennis Lockhart said yesterday policy should focus on creating a more dynamic economy after a recent cooling in growth.
Twenty-four of 41 economists surveyed by Bloomberg News on Sept. 18-19 said the Fed will take its first step in slowing its bond purchases in December.
Weaker Dollar
The dollar fell 2 percent in the past month, the biggest declined after the yen, according to Bloomberg Correlation-Weighted Indexes that track 10 developed-nation currencies. The yen slid 2.1 percent and the euro fell 1.2 percent.
Australia’s dollar dropped 0.4 percent to 93.92 U.S. cents, and New Zealand’s currency tumbled 1.1 percent to 82.75 cents. The MSCI Asia Pacific Index of shares fell 0.7 percent.
“The equity markets opened on a softer foot and we’re seeing a bit of weakness in the Aussie dollar as some risk comes off the table,” said Jim Vrondas, chief currency and payment strategist at OzForex Ltd. in Sydney. “I don’t expect it to have a long-lasting effect.”
The pound weakened for the third time in four days against the dollar after the British Bankers Association said loans approved for house purchases rose to 38,228 in August from a revised 37,428 the previous month. Economists surveyed by Bloomberg forecast 38,950.
“The pound has had a long rally recently on the back of strong U.K. data and a generally weaker dollar,” said Bernd Berg, an currency strategist at Credit Suisse Group AG in Zurich. “There is a lot of positive economic news priced into the pound. Any slight disappointment in economic data in the weeks ahead will lead to a reversal of the recent strength and a pull back towards $1.57.”
Sterling fell 0.3 percent to $1.5988 after climbing to $1.6163 on Sept. 18, the strongest since Jan. 11. The U.K. currency weakened 0.3 percent to 84.34 pence per euro.
To contact the reporters on this story: Lucy Meakin in London at lmeakin1@bloomberg.net.
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
