BLBG:Dollar Index Climbs to Five-Week High Before Payrolls Report
Dollar Index Climbs to Five-Week High Before Payrolls Report
“A strong number will fuel expectations for a tapering sooner rather than later and may also have implications for what the market expects in terms of the magnitude,” said Henrik Gullberg, a London-based currency strategist at Deutsche Bank AG. “The market to a significant extent is already positioned for a strong dollar.”
The Dollar Index, which IntercontinentalExchange Inc. uses to monitor the greenback against the currencies of six U.S. trading partners, gained 0.9 percent to 83.948 at 9:04 a.m. London time, after being as high as 83.999, the highest since May 29. It has gained 1 percent this week.
The dollar rose 0.3 percent to 100.29 yen, after touching 100.86 on July 3, the highest since May 31. The U.S. currency gained 0.2 percent to $1.2889 per euro. Yesterday, it reached $1.2883, the strongest since May 29. The euro was little changed at 129.24 yen. The pound lost 0.4 percent to $1.5005 after earlier falling to $1.4992, the least since March 14.
The greenback had gained 1.2 percent against the yen in the past five days, set for its third weekly gain. It has risen 0.9 percent versus the euro in the same time.
U.S. Jobs
The U.S. Labor Department will say today companies added 165,000 positions last month after increasing them by 175,000 in May, according to the median estimate by economists surveyed by Bloomberg News. A separate poll predicted the jobless rate fell to 7.5 percent from 7.6 percent in the previous period.
Draghi said yesterday in Frankfurt the ECB planned to keep the euro area’s main refinancing rate at a record-low 0.5 percent or even lower for an “extended period.” The decision comes amid political uncertainty in Portugal and negotiations over Greece’s economic-policy targets that are needed for the nation to receive its next aid payment.
Portugal, Greece
Portugal’s 10-year bond yield rose above 8 percent on July 3 for the first time since November. Portugal’s Prime Minister Pedro Passos Coelho said yesterday his government will have the support of the CDS party after the leader of that coalition partner resigned from his post as foreign affairs minister.
Greece, the trigger of the European debt crisis, is awaiting payments totaling 8.1 billion euros this month. Finance Minister Yannis Stournaras said yesterday progress has been made with the ECB, European Union and International Monetary Fund on all issues and the aim is to reach political agreement on July 8, when euro-area finance ministers are scheduled to meet in Brussels.
The euro lost 0.5 percent in the past week, paring its advance this year to 4.2 percent, according to Bloomberg Correlation-Weighted Indexes. The dollar has risen 7.1 percent since Dec. 31, the best performance in the gauge that tracks 10 developed-nation currencies. The yen has fallen 9 percent, the biggest decline within the group.
‘Not Warranted’
The BOE said in a statement yesterday in London the “implied rise in the expected future path of bank rate was not warranted by the recent developments in the domestic economy” after leaving its benchmark rate and bond-purchase program unchanged. The policy meeting was the first one led by Carney.
Barclays Plc cut its forecasts for the euro and pound following the ECB and BOE meetings.
“Both central banks have offered a clear counter to the tightening in financial conditions which have resulted from the moves in U.S. rates,” analysts, including London-based Chris Walker, wrote in a note to clients yesterday.
The euro will fall to $1.28 in one month and $1.27 in three months, compared with a previous call for it to trade at $1.32 and $1.30 in those periods, Barclays said. It left its six-month and 12-month predictions unchanged at $1.26 and $1.23, respectively. The pound will will fall to $1.49 in a month and to $1.41 in 12 months, the bank said.
Japanese investors who sold 10.6 trillion yen of foreign debt in the first half of 2013, the most in Ministry of Finance data since at least 2001, may be signaling a bottom for the yen.
“You’re seeing Japanese investors taking profit on their holdings of foreign bonds because of the yen depreciation,” David Woo, the global head of rates and currencies at Bank of America Corp. said in a phone interview from New York on July 3. Woo expects the yen to trade at 105 per dollar by year-end, with further declines driven by an improving U.S. economy.
To contact the reporters on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net; Kristine Aquino in Singapore at kaquino1@bloomberg.net;
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
