By Oliver Biggadike and Ye Xie
July 2 (Bloomberg) -- The dollar and yen rose against the euro as a government report showed employers cut more jobs last month than economists forecast, paring demand for higher- yielding assets.
The euro extended declines versus the dollar after European Central Bank President Jean-Claude Trichet said the target lending rate at a record low of 1 percent is “appropriate.” The dollar earlier climbed versus the euro after China renewed its call for a stable greenback and damped speculation the nation is seeking talks on a new international currency at next week’s Group of Eight meeting.
“The bias is for dollar strength after these numbers,” said Benedikt Germanier, a currency strategist in Stamford, Connecticut, at UBS AG, the world’s second-largest currency trader. “Investors are waking up and rubbing their eyes and saying, ‘It’s summer, and things are not getting better.’”
The dollar advanced 0.7 percent to $1.4047 per euro at 8:54 a.m. in New York, from $1.4142 yesterday. The U.S. currency dropped 0.4 percent to 96.25 yen from 96.65. The euro decreased 1.1 percent to 135.24 yen from 136.70.
Employers eliminated 467,000 jobs in June after a revised decrease of 322,000 in the previous month, the Labor Department reported today in Washington. The median forecast of 79 economists surveyed by Bloomberg News was for a reduction of 365,000. The unemployment rate increased to 9.5 percent.
The Dollar Index, which tracks the greenback against the euro, yen, pound, Canadian dollar, Swedish krona and Swiss franc, gained 1.6 percent on June 5, the most in more than four months, after the payrolls report showed job losses in the previous month slowed.
The dollar declined beyond $1.42 versus the euro yesterday after Reuters, citing G-8 sources, said China asked to debate proposals for a new global reserve currency at next week’s summit.
The ECB lent banks last week a record 442 billion euros ($621 billion) for 12 months at its key rate in the hope they will pass on cheaper credit to companies and households. It will also start buying 60 billion euros of covered bonds this month to encourage lending.
Sweden’s krona fell 1.9 percent to 7.285 against the dollar after the Riksbank unexpectedly cut its target lending by a quarter-percentage point to 0.25 percent, saying the economy required a “somewhat more expansionary monetary policy.” The reduction was forecast by only one economist, UBS’s Sunil Kapadia, of 17 surveyed by Bloomberg News, with the rest predicting no change.
“That was a big surprise for most people,” said Henrik Gullberg, a currency strategist in London at Deutsche Bank AG, the largest foreign-exchange trader. “They continue to be one of the most dovish central banks around, and this will stall an appreciation of the krona.”
The krona advanced yesterday to 7.5410 against the dollar, the strongest level since June 3.
The Swiss franc declined 0.1 percent to 1.5223 against the euro after a central bank governing board member, Thomas Jordan, said policy makers remain ready to act to prevent a further appreciation of the currency.
Japanese investors purchased the most overseas debt in four years, a government report showed today. They bought 1.53 trillion yen ($15.8 billion) more in foreign bonds than they sold in the week ended June 27, the most since the period ended June 2005, according to the Finance Ministry.
“Investors, especially individuals, are increasing their purchases of higher-yielding bonds,” said Yoshisada Ishide, who oversees $2.4 billion as a fund manager at Daiwa SB Investments Ltd. in Tokyo. “They feel more reassured about investing abroad. This trend is likely to persist in the third quarter. The bias is for yen weakness.”
To contact the reporters on this story: Oliver Biggadike in New York at obiggadike@bloomberg.net; Ye Xie in New York at yxie6@bloomberg.net
Last Updated: July 2, 2009 09:00 EDT
Posts
0 comments:
Post a Comment