BLBG:Euro Jumps As Draghi Says Currency Is Irreversible; Krona Gains
The euro jumped against the dollar by the most in almost a month after European Central Bank President Mario Draghi said policy makers will do whatever is needed to preserve the 17-nation currency.
Europe’s common currency rebounded from a drop of as much as 0.3 percent. “The ECB is ready to do whatever it takes to preserve the euro,” Draghi said during a speech in London today. The dollar fluctuated between gains and losses versus the yen, and approached an almost eight-week low, before a report that economists said will show orders for U.S. durable goods slowed in June. The Swedish krona appreciated after a gain in consumer confidence.
“That woke a few people up,” said Neil Jones, head of European hedge-fund sales at Mizuho Corporate Bank Ltd. in London. “He’s got the euro going, the reason being that this market is running with substantial short euro positions and they are being cut down.” A short position is a bet that a currency or asset will drop in value.
The shared European currency jumped 0.9 percent to $1.2262 at 7:40 a.m. New York time. It rose as much as 1.1 percent, the most since June 29. The euro advanced 0.9 percent to 95.84 yen. The dollar was little changed at 78.15 yen, after falling to 77.94 yen on July 23, the least since June 1.
Futures traders increased their bets last week that the euro will drop against the dollar, figures from the Washington- based Commodity Futures Trading Commission showed.
Net Shorts
The difference in the number of wagers by hedge funds and other large speculators on a decline in the euro compared with those on a gain -- so-called net shorts -- was 167,249 on July 17, compared with net shorts of 165,705 a week earlier, the CFTC said on July 20. The short positions reached a record 214,418 in June, the data showed.
A sentiment index in Sweden increased to 5.6 from 3.1 the previous month, sapping speculation about an interest-rate cut in September, data from the Stockholm-based National Institute of Economic Research showed today.
“This strengthens the view that the Riksbank will stay on hold in September,” Torbjoern Isaksson, an economist at Nordea Bank AB (NDA), said by phone from Stockholm. “So far the Swedish economy has been surprisingly resilient.”
The krona climbed 1 percent to 6.8962 against the dollar and was 0.1 percent stronger at 8.4576 per euro.
Credit Suisse Group AG’s private banking unit lowered its 12-month forecast for the euro to $1.18 from $1.23, citing pressure from negative core yields in Europe, according to an e- mailed report from the Zurich-based bank. The German two-year note yield was minus 0.048 percent today, below zero for the 15th straight day. Credit Suisse also cut its three-month forecast for the euro to $1.21 from $1.23.
The euro has dropped 4.6 percent in the past three months, according to Bloomberg Correlation-Weighted Indexes, the worst performance among 10 developed-market currencies. The yen has gained 7.7 percent, and the dollar strengthened 3.6 percent.
To contact the reporter on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
