BLBG:Euro Rises a Fifth Day Versus Yen Before ECB Meeting
The euro held a two-day advance against the dollar as a report showed euro-area services and manufacturing output contracted less than forecast in September before European Central Bank policy makers meet tomorrow.
The 17-nation euro climbed against all 16 of its major peers tracked by Bloomberg. The ECB and the Bank of England will hold policy meetings tomorrow. Australia’s dollar slid to the least in almost a month after the nation recorded its widest trade deficit since 2008. The Federal Reserve will tomorrow publish minutes of its Sept. 13 meeting when it announced that it will buy $40 billion of mortgage bonds a month.
“Generally speaking the news is poor yet the euro seems to find buyers on dips,” said Jane Foley, a senior currency strategist at Rabobank International in London. “We’ve had Bernanke open up quantitative easing, which puts the dollar on the back foot, and in that sort of environment, even though things aren’t wonderful in the euro zone, people are reluctant to buy U.S. dollars.”
The euro was little changed at $1.2931 at 10:45 a.m. London time after dropping to $1.2878. It rose 0.2 percent to 101.15 yen. The Japanese currency slid 0.1 percent to 78.22 per dollar after touching 78.31, the weakest since Sept. 21.
The Dollar Index, which tracks the U.S. currency against those of six major trading partners, was at 79.751, after sliding 0.2 percent over the past two days.
ECB Meeting
A composite index based on a survey of services and manufacturing purchasing managers fell to 46.1 from 46.3 in August, London-based Markit Economics said today. That’s above an initial estimate of 45.9 published on Sept. 20. A reading below 50 indicates contraction.
ECB officials meet tomorrow in Ljubljana, Slovenia, with policy makers expected to keep the bank’s benchmark interest rate unchanged at a record-low 0.75 percent, according to a Bloomberg survey of economists.
The euro has strengthened 1.6 percent in the past month, according to Bloomberg Correlation Weighted Indexes. The dollar declined 1.4 percent and the slid 1.3 percent.
Australia’s dollar sank today after data showed the nation’s trade deficit for August was almost three times wider than the median forecast of economists. Imports exceeded exports by A$2.03 billion ($2.07 billion) in August, compared with a revised A$1.53 billion shortfall in July.
In China, data today showed non-manufacturing industries grew at the weakest pace since at least March 2011, fanning speculation the Reserve Bank of Australia will lower interest rates again following a quarter-point reduction yesterday. China is Australia’s biggest trading partner.
Aussie Drops
“The Reserve Bank will cut again probably next month,” said Joseph Capurso, a strategist at Commonwealth Bank of Australia (CBA) in Sydney. “I don’t think the RBA will cut as much as the market is expecting, but those expectations have been one thing that has pushed the Aussie down.”
The so-called Aussie dropped as much as 0.7 percent to $1.0198, the weakest level since Sept. 6.
The yen held a three-day fall against the dollar, the longest runs of declines since Aug. 17, before the Bank of Japan (8301) begins its policy meeting tomorrow. Officials expanded the Japanese central bank’s asset-purchase program last month in a bid to stimulate economic growth.
Japan’s new Economy Minister Seiji Maehara this week pledged a closer watch over the BOJ to ensure it meets its 1 percent inflation goal, adding that purchases of foreign bonds may be a powerful tool for easing.
The dollar may climb toward its highs in August and September versus the yen, MacNeil Curry, New York-based chief rates and currencies technical strategist at Bank of America Corp. wrote in a report yesterday.
A break above resistance at 78.18 to 78.24 “reinvigorates the uptrend” for dollar-yen, Curry wrote. Resistance is a level where orders to sell may be clustered. The greenback peaked at 79.66 yen on Aug. 20 and rose to as high as 79.22 on Sept. 19, according to data compiled by Bloomberg.
To contact the reporters on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net; Lucy Meakin in London at lmeakin1@bloomberg.net.
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net.
