BLBG:Euro Rises Versus Dollar Amid EU Finance Meeting as Krona
The euro rose versus the dollar, heading for its biggest quarterly gain in a year, on speculation European finance ministers will agree to increase rescue funds at a two-day meeting starting today.
The 17-nation currency was poised for its largest quarterly advance versus the yen in 11 years before a U.S. report forecast to show consumer spending increased, boosting demand for higher- yielding assets. The yen climbed to a three-week high against the dollar amid speculation companies are bringing home overseas earnings before the fiscal year ends tomorrow. Sweden’s krona extended a weekly gain as investors pared bets the central bank will cut interest rates.
“Short positions on the euro are being pared back,” said Michael Derks, chief strategist at FXPro Financial Services Ltd. in London. “The prospect of today’s meeting has given the euro a bit of a boost and has helped the tone over the past few days.” A short position is a bet an asset will decline.
The euro rose 0.3 percent to $1.3345 at 8:31 a.m. in New York, increasing this quarter’s gain to 2.9 percent. It climbed to $1.3386 on March 27, the highest since Feb. 29. The shared currency dropped 0.2 percent to 109.50 yen, poised for a 9.8 percent advance this quarter, the most since the final three months of 2000. Japan’s currency climbed 0.5 percent to 82.04 per dollar after reaching 81.83, the strongest since March 9.
Euro-region governments are poised to agree on a firewall of about 800 billion euros at their meeting in Copenhagen, German Finance Minister Wolfgang Schaeuble said. That sum includes the 500 billion-euro permanent rescue fund plus bailouts already in place for Ireland, Portugal and Greece’s second rescue package, he told reporters.
‘Firm footing’
“The euro has been on a firm footing,” said Kengo Suzuki, a foreign-exchange strategist in Tokyo at Mizuho Securities Co., a unit of Japan’s third-largest bank by market value. “Should European finance ministers agree to beef up the rescue fund, the euro may get a bit firmer.”
The euro has strengthened 0.4 percent in 2012, its first quarterly gain in a year, according to Bloomberg Correlation- Weighted Indexes, which track 10 developed-market currencies. The yen has fallen 9.5 percent, while the dollar has weakened 2.8 percent, the two worst performers.
“The technical view is friendly for the euro,” Ralf Umlauf, head of floor research at Helaba Landesbank Hessen- Thueringen in Frankfurt, wrote in a note to investors.
The single currency will probably trade in a range between $1.3275 and $1.34, with the next resistance area around the Feb. 24 high of $1.3487, he wrote. Resistance refers to an area where sell orders may be grouped.
Dollar Index
The Dollar Index (DXY) dropped for a second day before today’s U.S. consumer-spending data. The gauge, which Intercontinental Exchange Inc. uses to track the greenback against the currencies of six U.S. trading partners, fell 0.5 percent to 78.829.
Consumer spending in the U.S. rose in February by the most in seven months, showing the biggest part of the economy is strengthening. Purchases climbed 0.8 percent, the largest gain since July, Commerce Department figures showed today in Washington. The median estimate of economists surveyed by Bloomberg News called for a 0.6 percent increase.
Speculation Japanese companies are buying the yen to bring home overseas earnings before the end of the fiscal year also boosted the currency.
“Yen is being bought at fiscal year-end,” said Noriaki Murao, managing director in New York at Bank of Tokyo-Mitsubishi UFJ Ltd. “Over time, I expect the yen to strengthen toward the 75 per dollar level.”
Krona Gains
The krona strengthened for a third day versus the euro as traders trimmed bets the Swedish central bank will reduce borrowing costs this year.
December futures on the Riksbank’s key rate are at 1.26 percent today, up from 1.17 percent a week ago, suggesting traders are starting to hedge bets the bank will cut once more as the economy improves. Policy makers lowered their benchmark to 1.5 percent last month to stave off a recession.
Swedish retail sales rose an annual 3.4 percent in February, the fastest pace since April, a report showed yesterday. A survey released March 28 showed consumer confidence at a seven-month high while manufacturing confidence rose to the highest since July.
The krona advanced 0.6 percent to 6.6242 per dollar, and rose 0.2 percent to 8.8461 versus the euro.
To contact the reporters on this story: Emma Charlton in London at echarlton1@bloomberg.net; Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net.
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
