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Wednesday, 17 July 2013
Dollar Advances Before Bernanke Speaks; Pound Falls Versus Euro
By Lucy Meakin & Mariko Ishikawa - Jul 17, 2013 10:48 AM GMT+0400
The dollar strengthened with Federal Reserve Chairman Ben S. Bernanke due to testify to Congress today, while the yen fell.
The Bloomberg Dollar Index snapped a two-day decline before U.S. data that economists said will show housing starts increased for a second month, adding to the case for the Federal Open Market Committee to slow monetary stimulus. The pound fell toward a four-month low against the euro before the Bank of England releases minutes of its July 3-4 policy meeting today amid speculation Governor Mark Carney will tie central bank guidance on interest rates to economic developments.
The dollar advanced 0.4 percent to 99.51 yen as of 10:54 a.m. in Tokyo after losing 0.8 percent yesterday. Photographer: Daniel Acker/Bloomberg
July 17 (Bloomberg) -- Deutsche Bank AG Co-Chief Executive Officer Anshu Jain talks about the outlook for China's economy and the bank's business strategy in Asia. Jain also discusses the impact of Federal Reserve monetary policy on markets, the U.S. economy and the dollar. He speaks in Singapore with Haslinda Amin on Bloomberg Television's "On the Move." (Source: Bloomberg)
“We are very constructive on the U.S. dollar for very fundamental reasons,” Deutsche Bank AG co-Chief Executive Officer Anshu Jain said in a Bloomberg Television interview with Haslinda Amin in Singapore. “A combination of a U.S. which is re-industrializing, and a household which is starting to spend again, could presage a long, strong period for the U.S., which of course would be good for the dollar.”
The dollar advanced 0.3 percent to 99.39 yen as of 7:47 a.m. London time after losing 0.8 percent yesterday. It strengthened 0.2 percent to $1.3133 per euro. Europe’s 17-nation currency was little changed at 130.53 yen.
The Bloomberg Dollar Index, which tracks the greenback against 10 other major currencies, rose 0.3 percent to 1,033.62.
Bernanke said on June 19 that the Fed may start slowing its unprecedented bond-buying program this year and end it entirely in mid-2014 if the economy achieves sustainable growth. Minutes released on July 10 of the FOMC’s last policy meeting showed “about half” of participants indicated “it likely would be appropriate” to end the buying late this year.
The central bank chairman is scheduled to deliver his semi-annual monetary policy report to Congress, starting with the House Financial Services Committee at 8:30 a.m. in Washington. The Fed purchases $85 billion of Treasuries and mortgage debt each month as part of its latest round of quantitative easing to cap borrowing costs, a program that tends to debase the currency.
The U.S. Commerce Department will say today that housing starts climbed 5 percent in June from a month earlier to a 960,000 annualized rate, according to the median estimate of economists surveyed by Bloomberg News.
JPMorgan Chase & Co.’s Global FX Volatility Index, a measure of currency fluctuations, slipped to 10.46 percent yesterday, the lowest since June 18. It reached a one-year high of 11.96 on June 24.
“The dollar is unlikely to be sold in the long term,” said Masato Yanagiya, the New York-based head of foreign-exchange and money trading at Sumitomo Mitsui Banking Corp., a unit ofJapan’s second-biggest financial group by market value. “The market consensus is for the Fed to taper quantitative easing in September.”
The Bank of Japan released minutes of its June 10-11 policy meeting today, in which one board member said it’s appropriate for the central bank to limit the period of its monetary stimulus to about two years and review it thereafter. If expectations rise in markets that the measures will continue for a longer period or “extreme” additional steps will be implemented, that would lead to economic instability in the medium to long term, the member said.
The pound slid 0.2 percent to 87.02 pence per euro after touching 87.07 yesterday, the weakest level since March 13. In a Bloomberg poll of 43 economists, 23 said the BOE governor will opt to link a pledge on loose policy to economic data. Eighteen said he will use a period of time instead.
“The minutes of the BOE meeting are a focus,” said Junichi Ishikawa, an analyst at IG Markets Securities Ltd. in Tokyo. “It’s possible sterling will extend losses should we see dovish comments emerge in the minutes.”
Canada’s currency weakened 0.3 percent to C$1.04 per U.S. dollar after gaining 0.6 percent yesterday. Bank of Canada Governor Stephen Poloz will keep the benchmark interest rate at 1 percent today as he releases his inaugural monetary policy report, according to a Bloombergsurvey of 20 economists.