Dollar at month low versus yen as shutdown looms; euro declines: SYDNEY, Sept 30 — The dollar dropped to a one-month low against the yen as political budget wrangling threatened a U.S. government shutdown from tomorrow. The U.S. currency extended its biggest weekly slide versus the yen in more than a month with Congress deadlocked over Republicans’ insistence on delaying the 2010 health-care law. The yen climbed against all its major peers and reached a three-week high per the euro as demand for safety increased with Italian Prime Minister Enrico Letta’s government on the verge of collapse after allies of former leader Silvio Berlusconi said they planned to quit the cabinet. “The market is cautious, and that’s what’s leading to the safe-haven trade at the moment,” said Stan Shamu, a market strategist at IG Ltd. in Melbourne. “The yen just seems to be gaining ground against everything.” The dollar touched ¥97.53, the least since August 29, before trading 0.4 per cent lower at ¥97.87 as of 8:10 a.m. in Tokyo. Japan’s currency added 0.6 per cent to ¥132.09 versus Europe’s 17-nation common tender and reached ¥131.38, the strongest level since September 9. The euro declined 0.2 per cent to US$1.3494. “Farce reigns and risk aversion rises,” Kit Juckes, the global strategist at Societe Generale SA in London, wrote in a note to clients. “The U.S. is still heading towards a shutdown, the Italian government is heading for a confidence vote that probably precedes elections. Yen up, euro down.” Quarterly moves The dollar is down 3 per cent in the past month, the biggest decline among 10 developed nation currencies tracked by Bloomberg Correlation Weighted Indexes. The yen has fallen 2.6 per cent and the euro has declined 0.8 per cent. Over three months, the U.S. currency has fallen 3.5 per cent, paring this year’s rise to 2.7 per cent. Japan’s currency fell 2 per cent over three months and 10 per cent since Dec. 31; while the euro is up 0.5 per cent and 5.3 per cent over those time frames. The U.S. Senate will reconvene today, when it will reject a House of Representatives plan passed yesterday to delay and limit President Barack Obama’s Affordable Care Act. In response, the House would add “another provision” to the spending measure and send it back to the Senate, said Representative Kevin McCarthy, the top House Republican vote counter. The provision would “reflect the House” and would be one “the Senate can accept,” McCarthy of California said on “Fox News Sunday” without offering details. Market measures Hedge funds and other large speculators betting on a rise in the U.S. dollar against currencies traded on the CME Group Inc. reduced net positions last week to the lowest since April, according to data from the Washington-based Commodity Futures Trading Commission. The cumulative net speculative dollar longs — in the CME Group’s yen, euro, Swiss franc, British pound, Mexican peso, Australian, New Zealand and Canadian dollar contracts — fell to 38,471 in the week ended September 24, the least since April 30. Italian Prime Minister Letta said he will ask for a vote of confidence on Wednesday, speaking on Rai 3 television. The Italian government has been torn apart by legal troubles facing Berlusconi, whose criminal tax-fraud conviction subjects him to expulsion proceedings in parliament. “Risky currencies should suffer as this will create risk aversion, while safe-haven currencies — the Swiss franc and the yen — will all benefit,” said Imre Speizer, a market strategist at Westpac Banking Corp. in Auckland. “We would expect the euro to trade lower against the dollar this morning because the Italian breakup wasn’t priced in Friday.” The Australian dollar fell 0.6 per cent to ¥91.02 and New Zealand’s kiwi declined 0.5 per cent to ¥80.88. Declines in the currencies of Australia and New Zealand may be limited before the release of a Chinese manufacturing index by HSBC Holdings Plc and Markit Economics that’s forecast to show a rise to 51.2 in September from 50.1 previously, according to a Bloomberg News survey of economists. The official Purchasing Managers’ Index due tomorrow will probably show an advance to 51.6 this month, the highest reading since April 2012, a separate survey predicts. — Bloomberg dlvr.it/43M3WT
Posted on: Mon, 30 Sep 2013 00:56:49 +0000
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