Bloomberg News

Dollar Stays Higher Versus Yen Before U.S. Spending Data

August 29, 2012

Dollar Remains Higher Against Yen Before U.S. Spending Report

U.S. consumer spending probably rose 0.5 percent in July from a month earlier, the most since February, according to the median estimate of economists in a Bloomberg News survey. Photographer: Peter Foley/Bloomberg

The dollar remained higher versus the yen following a gain yesterday before U.S. data forecast to show consumer spending climbed the most in five months.

The greenback held a gain against the euro as investors weigh whether Federal Reserve Chairman Ben S. Bernanke will signal a new round of bond buying when he speaks in Jackson Hole, Wyoming tomorrow. The euro was 0.5 percent from reaching an eight-week high versus the yen after European Central Bank President Mario Draghi said it’s in Germany’s interest to consent to extraordinary steps to preserve the single currency.

“The market is scaling back its expectations a little bit for another clear signal of imminent policy easing as early as this week,” said Ray Attrill, global co-head of foreign- exchange strategy at National Australia Bank Ltd. (NAB) in Sydney. “That’s why the dollar is just a little bit firmer.”

The greenback traded at 78.68 yen as of 9:58 a.m. in Tokyo after gaining 0.3 percent to 78.71 yesterday. It was unchanged at $1.2530 per euro following a 0.3 percent advance in New York. Europe’s shared currency was little changed at 98.59 yen after climbing to 99.18 on Aug. 21, the strongest since July 5.

U.S. consumer spending probably rose 0.5 percent in July from a month earlier, the most since February, according to the median estimate of economists in a Bloomberg News survey. The Commerce Department releases the figure today.

ECB Policy

The dollar has weakened 1.2 percent in the past month while the yen decreased 1.9 percent, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-market currencies. The euro rose 1.2 percent amid speculation the ECB will resume buying sovereign bonds to stem the debt crisis.

Demand for the euro increased after Draghi used the pages of German weekly Die Zeit yesterday to plead for a more expansive role for the central bank and to say that the crisis- struck currency can be stabilized without sacrificing each country’s independence to a unified European political system.

“A new architecture for the euro area is desirable to create sustained prosperity for all euro-area countries, and especially for Germany,” Draghi wrote. “Yet this new architecture does not require a political union first. Economic integration and political integration can develop in parallel.”

Draghi signaled on Aug. 2 that the central bank intends to join forces with governments to acquire bonds in sufficient quantities to lower borrowing costs. He will give a press conference on Sept. 6 after a meeting of policy makers.

“Expectations for the ECB are stronger than those for the Fed,” said Koji Iwata, vice president of foreign-exchange trading in New York at Mizuho Corporate Bank Ltd., a unit of Japan’s third-biggest financial group by market value. “We can say that’s why the euro remains stronger than other currencies.”

To contact the reporters on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Kristine Aquino in Singapore at kaquino1@bloomberg.net

To contact the editor responsible for this story: Garfield Reynolds at greynolds1@bloomberg.net


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