Bloomberg: Euro Rebounds From Two-Year Low Reached on ECB Stimulus Policies The 18-nation euro strengthened after failing to break through the $1.24 level, pushing the shared currency up from almost a two-year low reached as the European Central Bank considers increased monetary stimulus. The yen rallied from almost a seven-year low against the dollar as Bank of Japan Governor Haruhiko Kuroda said the economy is headed to achieve policy makers’ 2 percent inflation target. The U.S. currency reached the strongest level in more than five years after a report showed the U.S. economy grew at a faster pace than forecast in the third quarter. Norway’s krone slipped as crude-oil futures traded at almost a four-year low. “It’s covering existing dollar longs, we’re in the holiday week here, and as a result you can have a period of low liquidity,” said Brian Daingerfield, a currency strategist at Royal Bank of Scotland Group Plc’s RBS Securities unit in Stamford, Connecticut. A long position is a bet that an asset will increase in value. The euro gained 0.3 percent to $1.2474 per dollar at 5 p.m. in New York, after falling as much as 0.3 percent. The shared currency reached $1.2358 on Nov. 7, the lowest level August 2012. Financial markets in the U.S. are closed on Nov. 27 for Thanksgiving holiday. Market Prices The yen rose 0.3 percent to 117.97 per dollar after weakening to 118.98 on Nov. 20, the lowest level since August 2007. It was little changed at 147.17 per euro. Japan’s currency leads losses versus the dollar this month, falling 4.8 percent, followed by South Korea’s won, which is down 3.6 percent. South Africa’s rand has gained 0.7 percent, according to data compiled by Bloomberg. The U.S. currency has strengthened against all of its 16 major peers this year, with the Swedish krona losing 13.3 percent and Norway’s krone dropping 10.8 percent. The yen’s 14-day relative-strength index versus the dollar was at 23, and every day since Oct. 31 has been below the 30 level that signals to some traders that an asset is oversold. The yen rose today as core consumer-price gains are likely to reach 2 percent in or around the fiscal year starting next April, and efforts to end Japan’s deflationary mindset are progressing, Kuroda said in a speech in Nagoya, Japan. BOJ Stimulus The BOJ last month lifted the annual target for enlarging the monetary base to 80 trillion yen ($678 billion), from a range of 60 trillion yen to 70 trillion yen. The policy board voted to retain the plan at the end of a two-day meeting on Nov. 19. The euro slumped 1.1 percent last week as ECB President Mario Draghi said officials “will do what we must” to raise inflation as quickly as possible, boosting speculations the central bank will broaden its bond-buying program. “This is a typical position adjustment before the holiday, short-covering in euro after Mr. Draghi selloffs,” said Masafumi Takada, a New York-based director at BNP Paribas SA. The market is “long USD especially against the euro and yen.” A long position is a bet that an asset will increase in value. The krone dropped against 14 of its 16 major peers as crude futures remained near a four-year low even as Organization of Petroleum Exporting Countries members are set to meet on Nov. 27 amid speculation they will reduce its production ceiling. Norway is the biggest oil producer in Western Europe. The krone weakened 0.4 percent to 6.8043 per dollar. It dropped 0.6 percent to 8.4882 per euro. Real Rally Brazil’s real added 0.6 percent to 2.5301 per dollar on speculation that President Dilma Rousseff will appoint former Treasury Secretary Joaquim Levy as finance minister to restore growth to Latin America’s largest economy. The offshore yuan advanced 0.1 percent to 6.1468 per dollar as China’s central bank strengthened the onshore currency’s daily reference rate. The Shanghai Composite Index of shares closed at the highest level since 2011 on speculation the government will take more steps to support the economy. The Aussie extended its decline to a four-year low after Reserve Bank of Australia Deputy Governor Philip Lowe said the Australian economy “clearly has some challenges ahead.” He added the currency is “unusually high” and he expected further adjustment. Australia’s dollar fell 1 percent to 85.30 U.S. cents. Iron-ore futures for May delivery slid 2.7 percent on the Dalian Commodity Exchange. Iron ore is Australia’s largest export. Kiwi Drop New Zealand’s dollar fell 0.7 percent to 78.10 U.S. cents. Expectations for inflation two years from now fell to 2.06 percent in the fourth quarter, from 2.23 percent in the previous period, according to a survey of businesses published on the Reserve Bank’s website. The U.S. currency gained earlier after the Commerce Department reported gross domestic product expanded at a 3.9 percent annual rate, up from an initial estimate of 3.5 percent. “The preliminary numbers were great, but these revised numbers are difficult to comprehend, it’s virtually beaten all expectations of the pace of recovery,” said Michael Woolfolk, a global-markets strategist at Bank of New York Mellon in New York. The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major counterparts, dropped 0.2 percent to 1,099.34. It reached 1,102.87, the highest level on a closing basis since March 2009.
Posted on: Wed, 26 Nov 2014 10:32:55 +0000