BLBG:Dollar Falls Second Day Versus Yen on Fed Bets; Aussie Advances
The dollar fell for a second day versus the yen on speculation Federal Reserve speakers including Chairman Ben S. Bernanke will reiterate economic growth isn’t yet sufficient to trim stimulus.
The Bloomberg U.S. Dollar Index touched the lowest level in almost two weeks and Australia’s currency rallied as a report showed China plans to reduce its intervention in the foreign-exchange market. The euro touched a two-week high before data that economists said will show German investor confidence increased. Norway’s currency jumped after gross domestic product increased more than analysts forecast in the third quarter.
“The U.S. dollar has been under pressure right across the board,” said Emma Lawson, a Sydney-based senior currency strategist at National Australia Bank Ltd. “Certainly, the doves are taking the fore at the moment. Most investors have moved away from any expectation of tapering in December.”
The dollar fell 0.2 percent to 99.75 yen at 9:37 a.m. London time, extending yesterday’s 0.2 percent decline. It was little changed at $1.3512 per euro after touching $1.3543, the weakest level since Nov. 6. Japan’s currency gained 0.2 percent to 134.79 per euro.
The Bloomberg U.S. Dollar Index, which monitors the greenback against 10 major counterparts, fell 0.1 percent to 1,014.68 after touching 1,013.11, the lowest since Nov. 6.
Dudley’s Outlook
New York Fed President William C. Dudley said yesterday he’s more hopeful about the economy while indicating no change in bond buying.
“While growth in 2013 has been disappointing, I believe a good case can be made that the pace of growth will pick up some in 2014 and then somewhat more in 2015,” Dudley said yesterday. “As growth picks up, I expect to see more substantial improvement in labor market conditions.”
At a Nov. 14 congressional hearing on her nomination to run the Fed, Vice Chairman Janet Yellen indicated she’ll press on with the central bank’s monetary stimulus until she sees a robust recovery, downplaying risks the policy is inflating asset bubbles. Bernanke will speak at the National Economists Club in Washington later today.
The Commerce Department will say tomorrow that retail sales in the world’s biggest economy increased 0.1 percent in October after a 0.1 percent decline the previous month, according to the median estimate of economists surveyed by Bloomberg News. A separate report the same day is projected to show consumer prices stagnated in October from the previous month, after rising 0.2 percent in September.
China Intervention
Australia’s currency rose for a third day after reports that Governor Zhou Xiaochuan said the People’s Bank of China will “basically” exit from normal intervention in the foreign-exchange market, without giving a timeframe.
China will widen the yuan’s trading band in an “orderly” way as it seeks to enhance the currency’s two-way flexibility, Zhou wrote in a book explaining reforms outlined last week following a meeting of Communist Party leaders. The central bank currently sets a daily reference rate for the yuan, with the spot rate allowed to trade up to 1 percent on either side. The maximum allowed divergence was doubled in April 2012, having been increased from 0.3 percent in May 2007.
“The implication is that there would be less dollar buying and less dollar reserve accumulation from the PBOC down the road,” said Valentin Marinov, head of European Group-of-10 currency strategy at Citigroup Inc. in London. “That is being seen as dollar negative. The Aussie could do well as well if the PBOC actions are seen as consistent with growing confidence in the Chinese economy.”
RBA Minutes
Reserve Bank of Australia policy makers said it was “prudent” to keep the cash rate steady while gauging the impact of previous easing, according to minutes of the central bank’s Nov. 5 meeting released today.
The Aussie added 0.5 percent to 94.25 U.S. cents after advancing to 94.47, the strongest level since Nov. 8.
The ZEW Center for European Economic Research will say its index of German investor and analyst expectations, which aims to predict economic developments six months in advance, rose to 54 in November, from 52.8 the previous month, according to a Bloomberg survey of economists. That would be the highest since October 2009.
Norway’s krone appreciated 0.6 percent to 8.2221 per euro after reaching 8.2070, the strongest level since Nov. 11. It gained 0.6 percent to 6.0858.
The euro has strengthened 0.4 percent in the past month, according to Bloomberg Correlation-Weighted Indexes that track 10 developed-nation currencies. The dollar has climbed 1.8 percent and the yen is down 0.5 percent. The krone slumped 1.6 percent in the period.
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
