BLBG:Euro Heads for Third Monthly Gain as ECB Bets Pared; Krone Falls
The euro headed for a third monthly gain as investors pared bets for additional stimulus by the European Central Bank before a report that economists said will show inflation in the region accelerated this month.
The 17-nation currency was poised for its best month since April against the yen after data yesterday showed German inflation quickened more last month than analysts forecast. The yen was set for a fourth monthly decline against the dollar. Norway’s krone weakened versus all of its 16 major counterparts after the unemployment rate increased.
“Markets are mindful of the disinflationary pressures that are building up in Europe, so the German inflation number yesterday is probably providing some support for the euro,” said Jeremy Stretch, head of currency strategy at Canadian Imperial Bank of Commerce in London. “There is probably more to come from the ECB but not in the near term.”
The euro was little changed at 139.24 yen at 9:34 a.m. in London, having appreciated 4.2 percent this month. The common currency was also little changed at $1.3601, poised for gain of 0.2 percent in November. The yen traded at 102.35 per dollar, having slipped 3.9 percent since Oct. 31.
Consumer prices in the euro region rose 0.8 percent this month from a year ago, according to a Bloomberg News survey of economists before the European Union statistics office releases the data today. The ECB unexpectedly cut its benchmark interest rate to a record 0.25 percent on Nov. 7 after inflation slowed to a four-year low of 0.7 percent in October.
Quicker Inflation
The inflation rate in Germany, calculated using a harmonized European Union method, rose to 1.6 percent this month, the Federal Statistics Office said yesterday.
“The ECB has got limited room for maneuver on monetary policy -- willingness to move, rather than capacity,” said Greg Gibbs, a strategist at Royal Bank of Scotland Group Plc in Singapore. “The euro is going to continue to grind out gains until it forces either Europe back into crisis or the ECB to do something aggressive.”
The euro has gained 7.5 percent this year, the best performer of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar gained 3.9 percent, while the yen tumbled 14 percent.
The yen headed for a monthly loss against all its 16 major counterparts as Japanese government data today showed consumer prices excluding fresh food rose 0.9 percent in October from a year ago, the most since November 2008.
The Bank of Japan has been buying more than 7 trillion yen of government bonds each month in a bid to achieve 2 percent inflation in two years since April.
‘Japan’s Exit’
“The market is taking note of Japan’s exit out of deflation,” said Minori Uchida, head of global market research at Bank of Tokyo-Mitsubishi UFJ Ltd. in Tokyo. “The yen may test 103 per dollar.”
The krone weakened for the fifth time in six days against the euro as a report showed the Norwegian unemployment rate climbed to 2.6 percent in November.
The median estimate of economists in a Bloomberg survey was for the measure to stay at 2.5 percent.
Norway’s currency weakened 0.7 percent to 8.3431 per euro and slipped 0.7 percent to 6.1334 per dollar.
To contact the reporters on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net; David Goodman in London at dgoodman28@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
