By - Jan 12, 2011 10:29 AM GMT+0800
Jan. 10 (Bloomberg) -- Nick Bennenbroek, head of currency strategy at Wells Fargo & Co., talks about the outlook for the dollar and currency markets. Bennenbroek predicts the dollar will have about a 5 percent gain against the euro over the year and 11 percent versus the yen. He speaks with Betty Liu on Bloomberg Television's "In the Loop." (Source: Bloomberg)
The euro rose for a second day against the yen on speculation bond purchases by Asian nations will help stem a funding crisis in Europe.
The shared currency strengthened against 12 of its 16 major counterparts before a bond auction in Spain tomorrow that may see demand from China, which has expressed interest in buying the nation’s debt. The Australian dollar fell to a one-month low against the U.S. currency amid concern worsening floods will slow growth and keep the Reserve Bank of Australiafrom raising interest rates.
“The euro may be bought as markets have started to respect some movements to contain the crisis,” said Yousuke Hosokawa, a senior currency dealer in Tokyo at Chuo Mitsui Trust & Banking Co., a unit of Japan’s seventh-largest bank. “The market focus is clearly on the problems within the euro zone.”
The euro rose to 108.34 yen at 11:22 a.m. in Tokyo from 107.99 yen yesterday in New York. The currency traded at $1.3012 from $1.2974. The dollar was at 83.26 yen from 83.24 yen.
The so-called Aussie fell 0.1 percent to 98.62 U.S. cents. It touched 98.04 U.S. cents earlier, the lowest level since Dec. 9. The currency declined to 82.11 yen from 82.17 yen.
Spain will sell up to 3 billion euros ($3.9 billion) of 2016 bonds and Italy will offer as much as 6 billion euros of 2015 and 2026 bonds tomorrow, according to data compiled by Bloomberg.Portugal will sell up to 1.25 billion euros of 2014 and 2020 bonds today.
‘Temporary Rally’
“The focus of the markets will be on the Portuguese bond issue later today,” analysts led byHans-Guenter Redeker, London-based global head of foreign-exchange strategy at BNP Paribas SA, wrote in a research note. “If the auction goes well, we could see a temporary rally in the euro.”
The euro rebounded yesterday after Japan said it plans to buy bonds issued by Europe’s financial-aid funds, echoing a pledge by China to help stem the region’s debt crisis. Widening budget gaps and a surge in bond yields forced Greece and Ireland to accept bailouts last year.
China has voiced support for Europe, with Vice Premier Li Keqiang last week expressing confidence in Spain’s financial markets and pledging more purchases of that country’s debt.
The euro was supported after Die Welt reported in a preview of an article for today’s edition that euro-region governments are considering changing the terms for the bailout fund for member countries. The fund may extend the amount it can lend and lower the interest rate Ireland has to pay, the newspaper said, citing unidentified European Union diplomats.
Australian Dollar
Australia’s currency weakened versus most of its major counterparts as Brisbane faced its worst floods since 1893 and rivers swollen with heavy rain race toward the city, triggering evacuations.
The disaster “causes a little bit more uncertainty and policy hikes by the RBA will probably be on hold in the first quarter at least,” said Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney. “Long positioning of the market is closing. The Aussie is coming under pressure.”
Canada’s dollar gained for a fourth day versus its U.S. counterpart before a report today that may show Canadian new- home prices rose for a fourth month, adding to signs the economic recovery is building momentum.
Prices of new homes rose 0.1 percent in November, after a 0.1 percent increase in October, according to a Bloomberg News survey of economists before Statistics Canada’s report. The Bank of Canada released on Jan. 10 quarterly surveys that suggest businesses are enjoying easier access to credit amid an improving outlook for the economy, and executives are anticipating a pick-up in employment over the next year.
“We’ve seen some hawkish signals from the Bank of Canada,” said Todd Elmer, Singapore-based head of Group-of-10 currency strategy for Asia ex-Japan at Citigroup Inc. “The market was probably too quick to dismiss the surveys that we got two days ago, both of which pointed to continued broad-based strength in the economy. That does imply significant Canadian dollar outperformance on the crosses.”
Canada’s currency rose as high as 98.81 Canadian cents per U.S. dollar, the strongest since May 2008, before trading at 98.86 cents from 99.05 cents.
To contact the reporters on this story: Monami Yui in Tokyo at myui1@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.
Posts
0 comments:
Post a Comment