By Mariko Ishikawa and Monami Yui -
Oct 24, 2012 12:22 PM GMT+0800
The euro maintained losses against
most of its major peers before data that may add to evidence
Europe’s debt turmoil is weighing on economic growth.
The 17-nation currency traded near a one-week low against the U.S. dollar amid investor uncertainty that Spain will seek a bailout. Reports today are forecast to show manufacturing and services industries in the euro area contracted for a ninth month and German business confidence hovered close to the lowest since February 2010. The Australian dollar surged after a private report signaled that a slowdown in Chinese manufacturing is abating.
“We would see a bit more downside in the near term for the euro,” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp. (WBC), Australia’s second-largest lender. “Economic numbers are hurting the euro and the lack of a Spanish bailout is also hurting.”
The euro traded at $1.2991 as of 1:10 p.m. in Tokyo from $1.2987 yesterday, when it touched $1.2952, the lowest since Oct. 16. The common currency was little changed at 103.73 yen, after it dropped 0.7 percent in New York. The yen was unchanged at 79.85 from yesterday, when it slipped to 80.01, the weakest since July 6.
A composite index based on a survey of purchasing managers in manufacturing and services industries in the euro area was probably at 46.5 in October, below the 50 level which indicates a contraction, according to the median estimate of economists surveyed by Bloomberg News. While that’s up from 46.1 in September, it follows eight consecutive months of contraction.
Spanish Prime Minister Mariano Rajoy said in the senate yesterday there is a case for easing budget-deficit targets set by the European Union as the recession undermines tax revenue. Rajoy didn’t mention seeking aid even as he praised the European Central Bank’s offer to help lower troubled countries’ borrowing costs. Spain’s 10-year bond yield yesterday jumped 13 basis points to 5.62 percent yesterday.
“A pause in the slowdown of the Chinese economy is positive for market sentiment overall,” said Masafumi Yamamoto, chief foreign-exchange strategist in Tokyo at Barclays Plc.
Demand for Australia’s currency was also supported after data showed the nation’s consumer prices accelerated more than estimated in the third quarter, giving the Reserve Bank scope to pause next month in cutting interest rates.
The so-called trimmed mean gauge of core price rose 0.7 percent from the previous quarter, the Bureau of Statistics said in Sydney today, compared with an economists’ forecast of a 0.6 percent gain.
“The inflation data may have reduced the risk for rate cuts in the immediate term,” said Callum Henderson, the Singapore-based global head of currency research at Standard Chartered Plc. “In the short term, we may see the Aussie run back up to $1.04.”
The so-called Aussie gained 0.5 percent to $1.0316. New Zealand’s dollar advanced 0.1 percent to 81.28 U.S. cents and added 0.1 percent to 64.89 yen.
“We think the time is right for the BOJ to increase their QE significantly,” Westpac’s Speizer said, referring to the asset purchases, known as quantitative easing. “The markets think that they probably get an easing at the next meeting and that’s why they’ve bought dollar-yen.”
-- With assistance from Hiroko Komiya in Tokyo, Kristine Aquino in Singapore. Editor: Rocky Swift
To contact the reporters on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net.
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
The 17-nation currency traded near a one-week low against the U.S. dollar amid investor uncertainty that Spain will seek a bailout. Reports today are forecast to show manufacturing and services industries in the euro area contracted for a ninth month and German business confidence hovered close to the lowest since February 2010. The Australian dollar surged after a private report signaled that a slowdown in Chinese manufacturing is abating.
“We would see a bit more downside in the near term for the euro,” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp. (WBC), Australia’s second-largest lender. “Economic numbers are hurting the euro and the lack of a Spanish bailout is also hurting.”
The euro traded at $1.2991 as of 1:10 p.m. in Tokyo from $1.2987 yesterday, when it touched $1.2952, the lowest since Oct. 16. The common currency was little changed at 103.73 yen, after it dropped 0.7 percent in New York. The yen was unchanged at 79.85 from yesterday, when it slipped to 80.01, the weakest since July 6.
A composite index based on a survey of purchasing managers in manufacturing and services industries in the euro area was probably at 46.5 in October, below the 50 level which indicates a contraction, according to the median estimate of economists surveyed by Bloomberg News. While that’s up from 46.1 in September, it follows eight consecutive months of contraction.
PMI Data
Economists in a separate Bloomberg poll estimate the Ifo institute’s index of German business climate index was at 101.6 this month from 101.4 in September, the lowest since February 2010. Data yesterday showed a gauge of sentiment among French factory executives dropped to the least since August 2009 and Spain’s economy contracted for a fifth quarter.Spanish Prime Minister Mariano Rajoy said in the senate yesterday there is a case for easing budget-deficit targets set by the European Union as the recession undermines tax revenue. Rajoy didn’t mention seeking aid even as he praised the European Central Bank’s offer to help lower troubled countries’ borrowing costs. Spain’s 10-year bond yield yesterday jumped 13 basis points to 5.62 percent yesterday.
BOJ Meeting
The Australian and New Zealand dollars advanced after HSBC Holdings Plc and Markit Economics said a preliminary reading of a purchasing managers’ index for China rose to 49.1 in October from 47.9 last month. China is Australia’s biggest trading partner and New Zealand’s second-largest export market.“A pause in the slowdown of the Chinese economy is positive for market sentiment overall,” said Masafumi Yamamoto, chief foreign-exchange strategist in Tokyo at Barclays Plc.
Demand for Australia’s currency was also supported after data showed the nation’s consumer prices accelerated more than estimated in the third quarter, giving the Reserve Bank scope to pause next month in cutting interest rates.
The so-called trimmed mean gauge of core price rose 0.7 percent from the previous quarter, the Bureau of Statistics said in Sydney today, compared with an economists’ forecast of a 0.6 percent gain.
“The inflation data may have reduced the risk for rate cuts in the immediate term,” said Callum Henderson, the Singapore-based global head of currency research at Standard Chartered Plc. “In the short term, we may see the Aussie run back up to $1.04.”
The so-called Aussie gained 0.5 percent to $1.0316. New Zealand’s dollar advanced 0.1 percent to 81.28 U.S. cents and added 0.1 percent to 64.89 yen.
BOJ Meeting
The yen held near a three-month low amid speculation the Bank of Japan (8301) will expand stimulus next week. The BOJ meets on Oct. 30 and will issue revised economic projections for the 2012 and 2013 fiscal years and its first set of forecasts for 2014. Japan’s Economy Minister Seiji Maehara, who has been calling for more action from the central bank, said yesterday he may attend the meeting if his schedule permits.“We think the time is right for the BOJ to increase their QE significantly,” Westpac’s Speizer said, referring to the asset purchases, known as quantitative easing. “The markets think that they probably get an easing at the next meeting and that’s why they’ve bought dollar-yen.”
-- With assistance from Hiroko Komiya in Tokyo, Kristine Aquino in Singapore. Editor: Rocky Swift
To contact the reporters on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net.
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
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