Dollar Holds Advance on Fed Rate Outlook; Kiwi Declines The dollar held gains against major peers as signs of economic recovery supported the case for the Federal Reserve to raise interest rates. New Zealand’s currency fell for a third day after a producer-price index declined. The Bloomberg Dollar Spot Index rose from a two-week low before the Labor Department releases consumer-price data today. The euro held the biggest loss in almost two weeks before a report this week economists forecast will show manufacturing activity in the region slowed. Australia’s dollar rose to the highest this year versus the kiwi after the nation’s central bank reiterated a period of rates stability is prudent. “The U.S. data has been relatively supportive for the dollar,” said Kymberly Martin, a market strategist in Wellington at Bank of New Zealand Ltd. “Because the PPI number had a negative in front of it, it perhaps caught the market’s attention, and helped add some downward pressure to the New Zealand dollar.” The greenback was at $1.3356 per euro as of 12:17 p.m. in Tokyo from $1.3364 yesterday, when it strengthened 0.3 percent, the most since Aug. 5. It rose 0.1 percent to 102.62 yen. The 18-nation euro bought 137.06 yen from 137.07. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major currencies, was little changed at 1,020.62 from yesterday, when it fell to 1,018.70, the lowest level since Aug. 1. U.S. Economy U.S. consumer prices excluding food and energy probably increased 0.2 percent in July from the previous month, when they rose 0.1 percent, according to the median estimate of economists surveyed by Bloomberg News before the data today. The National Association of Home Builders/Wells Fargo sentiment measure climbed to 55 in August from 53 last month, the Washington-based group said yesterday. Readings above 50 mean more respondents said conditions were good. The Fed reduced monthly bond purchases by $10 billion for a sixth consecutive meeting last month to $25 billion. Chair Janet Yellen is scheduled to deliver a speech at an annual symposium in Jackson Hole, Wyoming, where the focus of the three-day meeting of central bankers and economists beginning Aug. 21 will be on the labor market. European Central Bank President Mario Draghi is also among the speakers. “It’s all but certain the Fed will move before the ECB and the Bank of Japan, where the expectation is for more policy easing,” said Yujiro Goto, a currency strategist in London at Nomura Holdings Inc., Japan’s largest brokerage. “The policy divergence is a positive for the dollar, and I don’t expect the outlook to change this week.” Kiwi Drops The kiwi dropped at least 0.4 percent against all its 16 major counterparts after the statistics bureau said today New Zealand producer output prices fell 0.5 percent in the second quarter from the previous three months, when they rose 0.9 percent. Input prices declined 1 percent in the period, unwinding a 1 percent climb. The government cut its forecast for economic growth and projected smaller budget surpluses today. The kiwi dollar slid 0.6 percent to 84.32 U.S. cents after touching 84.26, the weakest since Aug. 13. It fell 0.7 percent to NZ$1.1074 versus the Australian dollar, after reaching NZ$1.1075, the lowest since Dec. 4. The Aussie added 0.2 percent to 93.40 U.S. cents, after strengthening to 93.41, the most since Aug. 7. Australia’s currency rose against all of its major peers. Central bank minutes of its policy meeting this month reiterated that interest rates are set to remain on hold. Members “noted the significant uncertainties around the growth forecast and the importance of considering the risks to the forecast as well as the central projection,” the Reserve Bank of Australia said in minutes today of its Aug. 5 meeting, where it kept the cash rate unchanged at a record-low 2.5 percent.
Posted on: Tue, 19 Aug 2014 12:36:51 +0000
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