BLBG:Euro Falls Against Yen Before European Retail-Sales Data; Aussie Declines
The euro slid for a fourth day against the yen before data economists say will show the region’s retail sales dropped for a third month, adding to signs the currency bloc’s debt woes are hurting the economy.
The Dollar Index (DXY) reached the highest in more than two weeks before a U.S. report that may point to a continued expansion in service industries, easing speculation the Federal Reserve will add to monetary stimulus. Australia’s dollar slid after its biggest trading partner China said it will aim for slower growth. The yen rose amid speculation Japanese exporters are buying the currency after it touched a nine-month low.
“The euro is likely to weaken in the mid- to long-term,” said Kengo Suzuki, a foreign-exchange strategist in Tokyo at Mizuho Securities Co., a unit of Japan’s No. 3 bank by market value. “It’s hard to imagine the European economy being on a sustainable growth path as countries in the region are forced to take austerity measures because of the debt crisis.”
The euro slid 0.6 percent to 107.36 yen as of 6:30 a.m. in London from last week’s close. It was little changed at $1.3209. Japan’s currency rose 0.6 percent to 81.31 per dollar after earlier falling to 81.87, matching the weakest level since May.
The Dollar Index, which Intercontinental Exchange Inc. uses to track the U.S. currency against its six major counterparts, reached 79.489, the highest since Feb. 16, before trading at 79.378, little changed from March 2.
European Retail Sales
Euro-area retail sales probably declined 0.1 percent in January from the previous month when they fell 0.3 percent, a Bloomberg News survey of economists showed before data from the European Union’s statistics office today. The European Central Bank (EURR002W) is likely to keep its benchmark interest rate unchanged at a record low 1 percent at its March 8 meeting, according to a separate survey.
The Institute for Supply Management’s non-manufacturing index was at 56.2 last month, another survey showed before the report from the Arizona-based group today. The gauge for U.S. service industries was 56.8 in January, the highest since February 2011 and above the 50 level that signals expansion.
Fed Bank of Dallas President Richard Fisher speaks today about the economy. He said on Feb. 29 that policy makers “worry less about a double-dip recession.” The U.S. central bank, which will meet March 13, bought $2.3 trillion of bonds in two rounds of so-called quantitative easing from December 2008 to June 2011.
Fed Policy
“Good U.S. data makes it less likely that the Fed will do quantitative easing” again, said Alvin Liew, a senior economist at United Overseas Bank Ltd. (UOB) in Singapore. “That would keep the dollar fairly well supported at least in the near term.”
The dollar has advanced 4.1 percent in the past six months, while the euro has lost 2.9 percent, according to Bloomberg Correlation-Weighted Indexes that track 10 developed-market currencies. The yen slid 3.9 percent.
Futures traders are betting for the first time since May that the yen will fall against the dollar, figures from the Washington-based Commodity Futures Trading Commission show. 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 1,203 on Feb. 28, compared with net longs of 17,257 a week earlier.
Exporters’ Purchases
The yen appreciated versus all of its 16 major counterparts amid speculation Japanese exporters are taking advantage of the currency’s drop to repatriate overseas income.
“There are apparently substantial flows from exporters,” said Teppei Ino, an analyst in Tokyo at the Bank of Tokyo- Mitsubishi UFJ Ltd., a unit of Japan’s biggest financial group by market value. “The dollar-yen rate has neared 82, triggering buying of the yen.”
Australia’s dollar weakened against most of its peers amid concern slower growth in China’s economy will decrease demand for the South Pacific nation’s commodities.
China’s lower-growth goal is “spurring concerns about economic slowdown and a decline in commodity demand,” said Toshiya Yamauchi, a senior currency analyst in Tokyo at Ueda Harlow Ltd., which provides foreign-exchange margin-trading services. “That could weigh on commodity currencies” such as the Australian dollar.
China’s government will target economic growth of 7.5 percent this year, the lowest goal since 2004, according to a state-of-the-nation speech from Premier Wen Jiabao to lawmakers in Beijing today.
Australia’s currency retreated 0.2 percent to $1.0714 after falling 0.7 percent on March 2. It sank 0.7 percent to 87.16 yen.
To contact the reporters on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net.
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.
