Thursday, 10 October 2013

Dollar Climbs on Signs of Compromise in U.S. Debt Talks

By Joseph Ciolli & Lukanyo Mnyanda - Oct 10, 2013 4:48 PM GMT+0400

The dollar strengthened against the yen for a third day, the longest run of gains in a month, amid signs U.S. lawmakers may reach a compromise to avert an unprecedented default.
The Bloomberg U.S. Dollar Index touched a two-week high as congressional leaders were said to be open to a short-term increase in the nation’s debt limit. The greenback briefly pared its gain versus the yen after U.S. jobless claims last week rose more than forecast. The Swedish krona and Norwegian krone slid as reports showed inflation pressures eased in the Nordic economies, cooling bets that interest rates will have to rise.
U.S. Dollar The Bloomberg U.S. Dollar Index, which tracks the performance of the greenback against 10 major peers, rose 0.2 percent to 1,014.75, set for the highest close since Sept. 26. Photographer: Tomohiro Ohsumi/Bloomberg
Oct. 9 (Bloomberg) -- Valentin Marinov, head of Group-of-10 foreign-exchange strategy at Citigroup Inc. talks about the effect on the dollar of Janet Yellen's nomination for chairman of the Federal Reserve. He speaks with Anna Edwards and Mark Barton on Bloomberg Television's "Countdown." (Source: Bloomberg)
Oct. 3 (Bloomberg) -- Greg Gibbs, a senior currency strategist at Royal Bank of Scotland Group Plc in Singapore, talks about the U.S. debt ceiling, Federal Reserve monetary policy, and the implications for the dollar and the euro. He speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
“Both parties are aware that it’s not in anybody’s best interest for the U.S. to default on its debt,” Sireen Harajli, a foreign-exchange strategist at Mizuho Bank in New York, said in a phone interview. “It looks like we are going to avoid the situation where we’ll see an actual default, which is giving the dollar relief.”
The greenback advanced 0.5 percent to 97.81 yen at 8:47 a.m. New York time, set for a three-day gain that would be the longest run since Sept. 5. The dollar was little changed at $1.3531 per euro. The Japanese currency weakened 0.5 percent to 132.36 per euro.
The Bloomberg U.S. Dollar Index, which tracks the performance of the greenback against 10 major peers, was at 1,012.86, after touching 1,015.74, the highest since Sept. 27.

Lew Testifies

Treasury Secretary Jacob J. Lew warned Congress uncertainty over whether it will raise the debt ceiling is “beginning to stress the financial markets” and failing to do so by Oct. 17 could put Social Security and Medicare payments at risk. Lew testified to the Senate Finance Committee
House Republican and Senate Democratic leaders are open to a short-term increase in the debt limit, said congressional aides of both parties, who spoke on condition of anonymity. The movement comes after House Democrats met with PresidentBarack Obama at the White House. A small group of House Republicans is scheduled to meet with the president today.
“There’s an indication that there’s some movement going on that we could get some kind of deal that could raise the debt ceiling,” said Niels Christensen, chief currency strategist at Nordea Bank AB in Copenhagen. “Sentiment has turned a little bit more dollar-friendly.”
The U.S. borrowing authority lapses on Oct. 17 as congressional Republicans seek spending cuts and changes to the nation’s 2010 health-care law.
Minutes of the Federal Reserve’s Sept. 17-18 meeting showed yesterday that most policy makers said the central bank was likely to reduce the pace of its $85 billion in monthly bond purchases this year. The gathering took place before the political deadlock over the budget and debt limit.

Yellen Nomination

Obama yesterday nominated Fed Vice Chairman Janet Yellen to run the central bank to succeed Chairman Ben S. Bernanke, whose term ends Jan. 31.
The Swedish krona slid 0.8 percent to 8.8141 per euro after depreciating to 8.8190, the weakest level since June 25. The krone fell 1 percent to 8.1835 per euro, after reaching the lowest level since November 2010.
A report in Sweden showed headline inflation unexpectedly held at 0.1 percent, when economists surveyed by Bloomberg had predicted faster price growth. Underlying inflation inNorway slowed more than analysts estimated in September to 1.7 percent. Policy makers at both nations’ central banks last month kept rates unchanged and signaled higher rates next year.
The krone has declined 4.6 percent in the past six months, the worst performer after the Australian dollar among 10 major currencies tracked in Bloomberg Correlation-Weighted Currency Indexes. The Swedish currency slipped 0.9 percent in that period, leaving it with a 2.9 percent gain in 2013.

BOJ Governor

Bank of Japan Governor Haruhiko Kuroda is scheduled to speak today at the Council on Foreign Relations in New York. In April, he announced a plan to buy more than 7 trillion yen of Japanese government bonds per month to achieve 2 percent inflation in two years.
Japanese investors sold a net 2.2 trillion yen of overseas bonds in the week ended Oct. 4, the most on record, figures from the Ministry of Finance showed today in Tokyo.
To contact the reporters on this story: Joseph Ciolli in New York at; Lukanyo Mnyanda in Edinburgh at
To contact the editor responsible for this story: Dave Liedtka at