By Masaki Kondo and Lucy Meakin -
Oct 8, 2012 4:10 PM GMT+0800
The euro weakened before data today
that economists said will show German industrial production
fell, adding to evidence Europe’s sovereign-debt crisis is
weighing on growth.
The shared currency broke a seven-day stretch of gains versus the yen as a technical indicator signaled the euro’s advance was too rapid. European finance ministers will meet in Luxembourg today, while German Chancellor Angela Merkel visits Greece tomorrow for the first time since the crisis erupted. Australia’s dollar touched the lowest level in almost three months versus its U.S. peer as Asian shares fell and before a report this week that may show the nation’s unemployment rose.
“The headlines from Europe are probably going to get worse over the course of the next three to four months,” said Thomas Averill, managing director in Sydney at Rochford Capital, a currency and interest-rate risk management company. Europe’s economic fundamentals are “lackluster,” and its currency may head toward $1.20, he said.
The euro lost 0.5 percent to $1.2973 at 9:03 a.m. London time. It dropped 0.9 percent to 101.82 yen after reaching as high as 102.80 on Oct. 5, the strongest since Sept. 19. The dollar fell 0.4 percent to 78.33 yen.
Japanese markets are shut today for a national holiday, and the U.S. is observing Columbus Day.
The euro’s 14-day relative strength index versus the yen rose to 68 at the end of last week, the highest since Sept. 19 and near the 70 level that some traders see as a sign that an asset’s price has risen too fast and is poised to reverse.
Finance ministers meeting today are likely to make a positive statement on Greece’s progress toward meeting austerity targets needed to authorize the nation’s next bailout payment, European Union Commissioner for Economic and Monetary Affairs Olli Rehn said.
“Negotiations have progressed well in the past few days and last night,” Rehn said in an interview in Helsinki on Oct. 6. “This is why I assume and expect the euro-group to give a positive and supportive statement on Greece’s progress.”
The debt-saddled nation needs to find spending cuts to maintain access to 240 billion euros in rescue funds and is trying to reach an agreement with its official lenders to release the next payment of 31 billion euros. Steffen Seibert, Merkel’s chief spokesman, said Oct. 5 that Germany wants to “help Greece stabilize within the euro zone.”
“I would expect Mrs. Merkel will be giving a very strong public statement of support for Greece’s continued participation in the euro,” said Ray Attrill, global co-head of foreign- exchange strategy at National Australia Bank Ltd. in Sydney. “My guess is that that will be seen constructively as far as the euro is concerned.”
Futures traders have reduced bets over the past month that the euro will decline, according to figures from the Washington- based Commodity Futures Trading Commission.
The difference in the number of wagers by hedge funds and other large speculators on a decline in the euro compared with those on a gain was 50,265 on Oct. 2, around half the level of a month earlier. So-called net shorts slid to 50,238 on Sept. 25, a level unseen for 12 months.
“We remain cautious toward Australian dollar-U.S.dollar upside and would prefer to fade any upticks” toward the 100-day moving average of $1.0249, Oversea-Chinese Banking Corp. analysts in Singapore led by Selena Ling wrote in a research note today.
Australia’s jobless rate climbed to 5.3 percent last month from 5.1 percent in August, economist estimates compiled by Bloomberg showed before the data due Oct. 11.
The yuan rose to its highest level since 1993, nearing the strong end of the trading range allowed by the central bank, on speculation policy makers will take more steps to counter a slowdown in the global economy as Chinese financial markets opened today after a week-long holiday.
The yuan traded at 6.2850 per dollar, compared with 6.2849 on Sept. 28, according to the China Foreign Exchange Trade System. Today’s high of 6.2812 was the strongest level since China unified official and market exchange rates at the end of 1993 and exceeded the central bank’s reference rate by a record 0.98 percent, near to the maximum 1 percent divergence that is permitted.
To contact the reporters on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Lucy Meakin in London at lmeakin1@bloomberg.net.
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net.
The shared currency broke a seven-day stretch of gains versus the yen as a technical indicator signaled the euro’s advance was too rapid. European finance ministers will meet in Luxembourg today, while German Chancellor Angela Merkel visits Greece tomorrow for the first time since the crisis erupted. Australia’s dollar touched the lowest level in almost three months versus its U.S. peer as Asian shares fell and before a report this week that may show the nation’s unemployment rose.
“The headlines from Europe are probably going to get worse over the course of the next three to four months,” said Thomas Averill, managing director in Sydney at Rochford Capital, a currency and interest-rate risk management company. Europe’s economic fundamentals are “lackluster,” and its currency may head toward $1.20, he said.
The euro lost 0.5 percent to $1.2973 at 9:03 a.m. London time. It dropped 0.9 percent to 101.82 yen after reaching as high as 102.80 on Oct. 5, the strongest since Sept. 19. The dollar fell 0.4 percent to 78.33 yen.
Japanese markets are shut today for a national holiday, and the U.S. is observing Columbus Day.
The euro’s 14-day relative strength index versus the yen rose to 68 at the end of last week, the highest since Sept. 19 and near the 70 level that some traders see as a sign that an asset’s price has risen too fast and is poised to reverse.
German Economy
Germany’s industrial production decreased 0.6 percent in August from July, according to the median estimate of economists surveyed by Bloomberg News. That would be the biggest drop since April. Separate data today showed the nation’s exports rose 2.4 percent in August, while economists had estimated a 0.6 percent decline.Finance ministers meeting today are likely to make a positive statement on Greece’s progress toward meeting austerity targets needed to authorize the nation’s next bailout payment, European Union Commissioner for Economic and Monetary Affairs Olli Rehn said.
“Negotiations have progressed well in the past few days and last night,” Rehn said in an interview in Helsinki on Oct. 6. “This is why I assume and expect the euro-group to give a positive and supportive statement on Greece’s progress.”
The debt-saddled nation needs to find spending cuts to maintain access to 240 billion euros in rescue funds and is trying to reach an agreement with its official lenders to release the next payment of 31 billion euros. Steffen Seibert, Merkel’s chief spokesman, said Oct. 5 that Germany wants to “help Greece stabilize within the euro zone.”
Greece Support
The euro has gained 1.2 percent in the past month, the best performance among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen has fallen 0.3 percent, while the dollar declined 0.2 percent.“I would expect Mrs. Merkel will be giving a very strong public statement of support for Greece’s continued participation in the euro,” said Ray Attrill, global co-head of foreign- exchange strategy at National Australia Bank Ltd. in Sydney. “My guess is that that will be seen constructively as far as the euro is concerned.”
Futures traders have reduced bets over the past month that the euro will decline, according to figures from the Washington- based Commodity Futures Trading Commission.
The difference in the number of wagers by hedge funds and other large speculators on a decline in the euro compared with those on a gain was 50,265 on Oct. 2, around half the level of a month earlier. So-called net shorts slid to 50,238 on Sept. 25, a level unseen for 12 months.
Australia’s Dollar
Australia’s dollar fell along with Asian stocks amid diminished demand for higher-yielding assets. The so-called Aussie dropped 0.2 percent to $1.0171 and earlier touched $1.0149, the least since July 13. The MSCI Asia Pacific excluding Japan Index (MXAPJ) of shares lost 0.5 percent.“We remain cautious toward Australian dollar-U.S.dollar upside and would prefer to fade any upticks” toward the 100-day moving average of $1.0249, Oversea-Chinese Banking Corp. analysts in Singapore led by Selena Ling wrote in a research note today.
Australia’s jobless rate climbed to 5.3 percent last month from 5.1 percent in August, economist estimates compiled by Bloomberg showed before the data due Oct. 11.
The yuan rose to its highest level since 1993, nearing the strong end of the trading range allowed by the central bank, on speculation policy makers will take more steps to counter a slowdown in the global economy as Chinese financial markets opened today after a week-long holiday.
The yuan traded at 6.2850 per dollar, compared with 6.2849 on Sept. 28, according to the China Foreign Exchange Trade System. Today’s high of 6.2812 was the strongest level since China unified official and market exchange rates at the end of 1993 and exceeded the central bank’s reference rate by a record 0.98 percent, near to the maximum 1 percent divergence that is permitted.
To contact the reporters on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Lucy Meakin in London at lmeakin1@bloomberg.net.
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net.
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