BLBG:Dollar Falls to Week Low Before Fed Speakers; Rupee Gains
The Bloomberg U.S. Dollar Index headed for its lowest close in more than a week amid bets some Federal Reserve speakers will echo Chairman-nominee Janet Yellen in reiterating the need for monetary stimulus.
The dollar slid for a second day against the euro before remarks today by New York Fed President William C. Dudley, a permanent voter on monetary policy. His peers Charles Plosser and Narayana Kocherlakota are also scheduled to speak. India’s rupee led gains among Asian currencies as equities in the region strengthened. The yen rebounded from the weakest this month versus the euro before Bank of Japan policy makers meet this week.
“The market is treating the dollar with benign neglect,” said Peter Kinsella, a foreign-exchange strategist at Commerzbank AG in London. “Yellen was dovish and some of the structural U.S. data isn’t fantastic. As long as equity sentiment remains as good as it is, I don’t see a reason for the dollar to appreciate strongly.”
Bloomberg’s U.S. Dollar Index, which monitors the greenback against 10 major counterparts, fell 0.2 percent to 1,015.06 at 10:41 a.m. London time, set for the lowest close since Nov. 6.
The dollar fell 0.1 percent to $1.3508 per euro after touching $1.3518, also the weakest since Nov. 7. The U.S. currency dropped 0.2 percent to 99.97 yen after rising to 100.44 on Nov. 15, the strongest level since Sept. 11. Japan’s currency gained 0.1 percent to 135.04 per euro after depreciating to 135.40, the weakest since Oct. 30.
‘Murky’ Data
“In the short term, the U.S. dollar could weaken as the realization that tapering is not imminent occurs,” said Hans Kunnen, a senior economist at St. George Bank Ltd. in Sydney. “U.S. data will be murky for the next few months until the shutdown washes through. Any data at present is treated with a little bit of suspicion,” he said, referring to a partial government shutdown in the U.S. last month.
At her Nov. 14 congressional hearing, Fed Vice Chairman Yellen indicated she’ll press on with the central bank’s unprecedented monetary stimulus until she sees a robust recovery, downplaying risks the policy is inflating asset bubbles. Dudley said Oct. 15 that the Fed is missing “by much more” on the employment side of its mandate than on the inflation side.
Boston Fed President Eric Rosengren said in Abu Dhabi today that big international banks with broker-dealer operations pose risks to financial stability.
Retail Sales
The Commerce Department will say on Nov. 20 retail sales in the world’s biggest economy were unchanged in October after a 0.1 percent decline the previous month, according to the median estimate of economists surveyed by Bloomberg News. A report on the same day will show consumer prices stagnated last month after rising 0.2 percent in September, according to a separate Bloomberg survey of analysts.
Economists forecast the Fed will delay tapering asset purchases until March even after a report showed employers added more jobs than forecast in October.
Policy makers will pare the monthly pace of bond buying to $70 billion at their March 18-19 meeting from the current pace of $85 billion, according to the median of 32 economist estimates in a Bloomberg survey on Nov. 8.
‘Risk On’
The MSCI Asia Pacific Index of shares rose for a third day, climbing 1.1 percent. The Indian rupee reached 62.414 per dollar, the strongest since Nov. 7. The New Zealand dollar rose most against the greenback among the 16 major currencies tracked by Bloomberg, followed by the Korean won.
Futures traders increased their bets that the yen will decline against the U.S. dollar to the most since May, figures from the Washington-based Commodity Futures Trading Commission showed last week.
The difference in the number of wagers by hedge funds and other large speculators on a decline in the yen compared with those on a gain -- so-called net shorts -- was 95,107 on Nov. 12, compared with net shorts of 73,792 a week earlier.
The yen declined 1.4 percent in the past week, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The euro gained 0.4 percent and the dollar weakened 0.5 percent.
JPMorgan Chase & Co.’s G-7 FX Volatility Index fell to 7.68 percent, set for the lowest close since Oct. 30.
BOJ Governor Haruhiko Kuroda and his board will gather for a two-day meeting starting Nov. 20. Almost three-quarters of economists in a Bloomberg survey expect the central bank will bolster stimulus in the first six months of 2014.
“The selling of the yen is likely to continue,” said Toshiya Yamauchi, a senior analyst in Tokyo at Ueda Harlow Ltd. “The market now has its eye on the yen’s low of 100.61,” Yamauchi said in reference to the Japanese currency’s trough against the dollar on Sept. 11.
To contact the reporters on this story: Neal Armstrong in London at narmstrong8@bloomberg.net; Kristine Aquino in Singapore at kaquino1@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
