BLBG:Euro Falls From Three-Week High on Economic Data as Yen Climbs
The euro fell from the highest level in three weeks versus the dollar after data showing retail sales in Germany fell and euro-zone unemployment rose to a record sapped demand for the region’s assets.
A gauge of expected price swings for Europe’s shared currency climbed to a two-month high as European Central Bank Governing Council member Ignazio Visco said the ECB “stands ready” to act. The dollar rose before a report economists forecast will show U.S. consumer spending stagnated. The yen headed for weekly gains against all of its 16 major peers after a slide in Japanese stocks. South Africa’s rand weakened before data predicted to show the nation’s trade deficit widened.
“We have some not very positive numbers out of Europe and that’s clearly a factor weighing on the euro,” said Sonja Marten, a currency strategist at DZ Bank AG in Frankfurt. “The picture for the euro region remains pretty bleak so any upside for the euro will be limited.”
Europe’s shared currency fell 0.5 percent to $1.2988 at 7:36 a.m. New York time. It rose to $1.3061 yesterday, the most since May 9. The euro slid 0.8 percent to 130.36 yen. Japan’s currency strengthened 0.4 percent to 100.34 per dollar.
The euro will decline to $1.21 in a year, DZ Bank’s Marten predicted.
Retail sales in Germany dropped 0.4 percent from March, when they declined a revised 0.1 percent, the Federal Statistics Office in Wiesbaden said. The median forecast of economists in a Bloomberg survey was for a 0.2 percent increase.
Unemployment Climbs
The euro-area unemployment rate rose to 12.2 percent from 12.1 percent in March, the European Union’s statistics office in Luxembourg said today. That’s in line with the median of 37 economists’ estimates in a Bloomberg News survey.
The one-week implied volatility of the euro, derived from option premiums, jumped to as high as 11.5 percent, a level unseen since March 20.
ECB policies have helped the countries hit hardest by economic tensions, Visco said in the text of a speech delivered today at the Italian central bank’s annual meeting in Rome. The ECB’s governing council “stands ready to intervene again” in ways that are consistent with its monetary policy stance, he said.
The Dollar Index advanced, paring a second weekly decline. The gauge, which Intercontinental Exchange Inc. uses to track the greenback against currencies of six U.S. trading partners, rose 0.2 percent to 83.226. It has fallen 0.6 percent since May 24, after sliding 0.7 percent the previous week.
Spending Report
Consumer spending in the U.S. was little changed in April, following a 0.2 percent rise in March, according to the median of 79 forecasts in a Bloomberg survey. The Commerce Department will release the spending report at 8:30 a.m. in Washington. Consumer sentiment surged this month to the highest level in almost six years, separate figures may show.
The Federal Reserve is buying $85 billion of government and mortgage debt a month in a bid to boost the economy through low borrowing costs. The central bank’s Chairman Ben S. Bernanke said on May 22 that policy makers could cut the pace of purchases should they see indications of sustained improvement in economic growth.
The dollar has climbed 5 percent this year, the most among the 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes, amid speculation the U.S. economy is improving. The yen is the worst performer, slumping 11 percent, while the euro climbed 3.2 percent.
The yen was poised for its eighth monthly decline against the greenback, the longest streak since 1996.
Nikkei Drops
About $6 billion in dollar-yen options will expire today at strike prices of 100.50, 100.80 and 101 yen, according to data compiled by Bloomberg.
Japan’s Nikkei 225 Stock Average (NKY) plunged 5.7 percent this week, the biggest decline since the period ended March 18, 2011.
The rand fell 1 percent to 10.1430 per dollar, taking its weekly slide to 5.9 percent, the most since September 2011.
The nation’s trade gap was 9.5 billion rand last month, compared with a shortfall of 7.8 billion rand in March, according to the median estimate in a Bloomberg survey of economists.
“We remain structurally bearish on the rand,” Matthew Sharratt, an economist at Bank of America Merrill Lynch in Johannesburg, wrote in a note to clients today. “Sentiment remains negative and there appear to be few positive catalysts in the pipeline.”
To contact the reporter on this story: Emma Charlton in London at echarlton1@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
