Euro Near 1-Month Low Before ECB Meets as Portuguese Bonds Drop The euro traded 0.7 percent from its weakest in more than a month before the European Central Bank meets following recent comments from President Mario Draghi that monetary policy will stay accommodative. The yen held its gain versus the euro after Portugal’s bonds slumped and two of the nation’s ministers resigned, reigniting concern Europe’s sovereign-debt crisis is worsening. The Dollar Index declined yesterday from a one-month high ahead of a U.S. jobs report that may help signal whether the economy is strong enough for the central bank to pare stimulus. “We’re not particularly upbeat about the euro,” said Hans Kunnen, chief economist in Sydney at St. George Bank Ltd. “The re-emergence of uncertainty following the resignation of the Portuguese finance minister becomes a central theme for us and there is a lack of perceived progress in the reform process in Europe. Any comments from the ECB would more likely weigh to the downside.” The euro traded at $1.3018 as of 8:51 a.m. in Tokyo from $1.3009 in New York yesterday, when it touched $1.2923, the least since May 29. It fetched 130.10 yen after yesterday dropping 0.5 percent to 129.97. The yen was at 99.94 per dollar after yesterday rising 0.7 percent to 99.91. The Dollar Index, which Intercontinental Exchange Inc. uses to monitor the greenback against the currencies of six major U.S. trading partners, dropped 0.4 percent to 83.231 yesterday after earlier touching 83.717, the most since May 29. With Portugal’s 10-year yield yesterday climbing above 8 percent for the first time since November, investors are seeking assurance from the ECB president that the central bank has no plans to end its current accommodative stance. Some economists are suggesting Draghi will go a step further and offer commitments on the path of interest rates. “Forward guidance is probably the most powerful tool the ECB has left,” said Nick Kounis, head of macro research at ABN Amro Bank NV in Amsterdam. The central bank will keep its benchmark interest rate unchanged at a record low of 0.5 percent today, according to 61 of 62 forecasts in a Bloomberg News survey of economists. Portuguese Prime Minister Pedro Passos Coelho said in a televised speech from Lisbon this week that he’s trying to hold his government together. Foreign Affairs Minister Paulo Portas, leader of junior coalition party CDS, quit in protest at the government’s budget policy. Finance Minister Vitor Gaspar also stepped down, saying his credibility had been compromised by the government’s failure to meet budget targets set by the European Union. In the U.S., a Labor Department report on July 5 may show nonfarm payrolls increased by 165,000 jobs in June, a Bloomberg survey forecast. The unemployment rate is predicted to fall to 7.5 percent from 7.6 percent. The U.S. central bank buys $85 billion of Treasuries and mortgage bonds each month to put downward pressure on borrowing costs and fuel growth. Federal Reserve Chairman Ben S. Bernanke said June 19 policy makers may slow the purchases this year and end them in 2014 if economic growth meets policy makers’ goals. U.S. financial markets are closed today for the Independence Day holiday.
Posted on: Thu, 04 Jul 2013 00:26:09 +0000
Trending Topics
Recently Viewed Topics
© 2015