BLBG:Dollar Approaches 3 1/2-Year High on U.S. Growth Pickup
The dollar approached its highest level in 3 1/2 years versus the yen as signs of a strengthening recovery in the world’s biggest economy boosted demand for the U.S. currency.
The Dollar Index traded near its strongest in seven months on prospects data in two days will show a gain in retail sales, following reports last week that said the jobless rate dropped and payrolls increased. The yen was 0.8 percent from its lowest level in three weeks against the euro after Japan’s machine orders fell more than expected and Haruhiko Kuroda, the nominee for central bank governor, said current monetary easing efforts aren’t enough to beat deflation.
“The U.S. economy is doing OK and I think it’s going to have a reasonable 2013,” said Thomas Averill, managing director in Sydney at Rochford Capital, a currency and interest-rate risk management company. “You’re going to see the value of the greenback very sensitive to movements in unemployment data.”
The dollar rose 0.1 percent to 96.08 yen as of 6:51 a.m. in London after touching 96.55 on March 8, the highest since August 2009. It fetched $1.3009 per euro from $1.3005 last week in New York. Japan’s currency lost 0.1 percent to 124.97 per euro from the end of last week, when it slid to 125.92, the weakest since Feb. 14.
Retail Gains
Sales at U.S. retailers probably rose 0.5 percent last month after a 0.1 percent gain in January, according to the median estimate of economists surveyed by Bloomberg News before the Commerce Department releases the figures on March 13.
Employers in the U.S. added 236,000 jobs in February for the third monthly increase above 200,000 in four months, pushing down the jobless rate to a four-year low of 7.7 percent, according to Labor Department data released March 8.
The Dollar Index, which Intercontinental Exchange Inc. uses to track the greenback against the currencies of six major U.S. trade partners, was little changed at 82.679 after touching 82.924 on March 8, the highest since Aug. 3.
The dollar gained 3 percent in the past three months, while the euro added 2.9 percent, according to Bloomberg Correlation- Weighted Indexes. The yen tumbled 13 percent, the biggest decline among the 10 developed-nation currencies tracked by the set of gauges.
Japan’s Cabinet Office said today machine orders fell 13.1 percent in January, exceeding the median forecast in a Bloomberg survey for a 1.7 percent drop.
Kuroda Testimony
Today’s report adds to evidence of a slowdown in Asia’s second-biggest economy. Kuroda, who currently serves as president of the Asian Development Bank, told Japanese lawmakers today the central bank should consider buying large amounts of longer-term debt to achieve its 2 percent inflation target as soon as possible. The yen won’t weaken forever amid expectations for monetary easing, he said.
“There are expectations for further monetary easing because of the stance that Kuroda has shown, while people are starting to look to a possible exit strategy in the U.S. amid the mild economic recovery,” said Kengo Suzuki, a currency strategist at Mizuho Securities Co. in Tokyo. “With the resilient stock market, the prevailing atmosphere is higher risk appetite and a weaker yen.”
The Nikkei 225 Stock Average (NKY) climbed 0.5 percent. The measure last week recovered its losses since the 2008 collapse of Lehman Brothers Holdings Inc.
In Europe, economists surveyed by Bloomberg News predict France’s statistics office will say today industrial production fell 0.2 percent in January after a 0.1 percent drop in the previous month.
Italian GDP
Italy’s gross domestic product probably declined 0.9 percent in the fourth quarter, confirming an earlier projection, according to the median estimate of a separate Bloomberg poll taken before the final reading is released today.
A political deadlock remains in Italy, the euro area’s third-biggest economy, after inconclusive elections on Feb. 24-25 allowed former Prime Minister Silvio Berlusconi and comedian-turned-politician Beppe Grillo to establish blocking minorities in the Senate.
“While financial conditions have clearly improved in the euro zone, the growth outlook has deteriorated further,” Barclays Plc currency strategists, including Chris Walker in London, wrote in a research note yesterday. “Political risks in Italy show no signs of receding and it looks increasingly unlikely that the center-left will form a governing coalition any time soon. We expect these factors to increasingly weigh on the euro.”
Euro Bears
The difference in the number of wagers by hedge funds and other large speculators on a decline in the euro compared with those on an advance, so-called net shorts, was 26,116 in the period through March 5, according to figures from the Commodity Futures Trading Commission. That’s the most bearish reading since the week through Dec. 14.
A decline in the euro versus its U.S. peer is “likely,” Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York, wrote in a note to clients. “Our next target for the euro is near $1.2880,” Chandler wrote, referring to a level unseen since Dec. 7.
Australia’s dollar fell after data showed industrial production in China, the South Pacific nation’s biggest trading partner, had its slowest start to a year since 2009. The so- called Aussie lost 0.1 percent to $1.0223.
To contact the reporters on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net; Masaki Kondo in Singapore at mkondo3@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
