Monday, 11 March 2013

Dollar Approaches 3 1/2-Year High on U.S. Growth Pickup

By Anchalee Worrachate & Kristine Aquino - Mar 11, 2013 1:53 PM GMT+0400

The dollar approached the strongest since August 2009 versus the yen as signs the American economy is gaining momentum boosted demand for the U.S. currency.
The Dollar Index (DXY) traded near its highest level in seven months before report this week that economists said will show retail sales improved and consumer prices increased in February, after the Labor Department said last week the jobless rate declined. The yen was 0.7 percent from a three-week low against the euro after Japanese machine orders fell more than economists forecasts. South Korea’s won weakened after the North threatened to target the South’s incoming defense minister.
March 6 (Bloomberg) -- Beat Siegenthaler, a senior foreign-exchange strategist at UBS AG, discusses Federal Reserve and European Central Bank monetary policy and the outlook for the dollar, Swiss franc and euro. He speaks with Mark Barton and Caroline Hyde on Bloomberg Television's "Countdown." (Source: Bloomberg)
March 8 (Bloomberg) –- Bill Gross, manager of the world’s biggest bond fund at Pacific Investment Management Co., Jeffrey Joerres, chief executive officer of Manpower Inc., and Diane Swonk, chief economist at Mesirow Financial Inc., offer their views on today's U.S. jobs data for February, the possible impact of federal spending cuts on the labor market and the U.S. economy. This report also includes comments from Alan Krueger, chairman of the White House Council of Economic Advisers; Renee Haugerud, chief investment officer of Galtere Ltd., and Carla Ann Harris, Managing director of Morgan Stanley. (Source: Bloomberg)
“There are still some headwinds in the U.S. economy coming from its fiscal outlook but the recent data suggested the economic recovery is probably robust enough to accommodate the fiscal setback,” said Jane Foley, a senior foreign-exchange strategist at Rabobank International in London. “That should be positive for the dollar.”
The dollar rose 0.1 percent to 96.12 yen at 9:46 a.m. in London after climbing to 96.55 on March 8, the highest since Aug. 11, 2009. The U.S. currency was little changed at $1.3004 per euro. The yen dropped 0.1 percent to 124.98 per euro after sliding to 125.92 on March 8, the weakest since Feb. 14.
Rabobank predicts the dollar will strengthen to $1.28 per euro in three months, compared with its previous forecast of $1.30, Foley said.

Retail Sales

U.S. retail sales rose 0.5 percent in February after a 0.1 percent gain in January, according to a Bloomberg News survey before the Commerce Department report on March 13. The consumer- price index climbed 0.5 percent, after being little changed in January, a separate survey showed ahead of the data March 15. The jobless rate fell to a four-year low of 7.7 percent, the Labor Department said last week.
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 82.726 after climbing to 82.924 on March 8, the highest since Aug. 3.
The dollar gained 3.3 percent this year, the best performer after the Swedish krona, according to Bloomberg Correlation- Weighted Indexes that track 10 developed-nation currencies. The euro rose 1.7 percent, while the yen slid 7.8 percent.
The yen weakened versus most of its 16 major counterparts today after Japan’s Cabinet Office said machine orders fell 13.1 percent in January, exceeding the median forecast in a Bloomberg survey for a 1.7 percent decline.
Haruhiko Kuroda, the nominee for central bank governor, told Japanese lawmakers today the central bank should consider buying large amounts of longer-maturity debt to achieve its 2 percent inflation target as soon as possible. The yen won’t weaken forever amid expectations for more easing, he said.

‘Exit Strategy’

“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. inTokyo. “With the resilient stock market, the prevailing atmosphere is higher risk appetite and a weaker yen.”
The won fell to one-month low against the dollar after North Korea’s Committee for the Peaceful Reunification of Korea said it would target South Korea’s incoming defense minister.
Kim Byung Kwan, a former general who commanded the U.S.- South Korea Combined Forces, will be the “first target in the great war for national reunification,” the committee said in a statement carried by the official Korean Central News Agency yesterday. Kim said in his March 8 parliamentary confirmation hearing the South will respond to a North Korean artillery attack by toppling the regime, Yonhap News reported.

‘Selling Pressure’

“The won is coming under selling pressure as the North Korean threat prompts dollar buying,” said Jeon Seung Ji, a currency analyst at Samsung Futures Inc. in Seoul. “Some exporters are waiting to settle their deals near the level, which may provide some buffer to the won.”
The won dropped 0.4 percent to close at 1,095 per dollar after sliding to 1,102.65, the weakest since Oct. 25.
The euro was little changed against the dollar even after Fitch Ratings last week downgradedItaly’s credit rating to BBB+ from A-, saying inconclusive elections threatened the country’s ability to respond to the recession.
A decline in the euro versus the dollar 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,” he wrote. That would be the weakest since Dec. 7.
To contact the reporters on this story: Anchalee Worrachate in London at; Kristine Aquino in Singapore at
To contact the editor responsible for this story: Paul Dobson at