Bloomberg News

Dollar Index Rises on Fed Bets; Aussie, Kiwi Fall on China Data

June 09, 2013

The Dollar Index rose for a second day before Federal Reserve of St. Louis President James Bullard speaks today amid speculation the central bank will slow monetary stimulus as the economy improves.

The greenback gained against the yen, rallying from the lowest in two months, after better-than-estimated U.S. jobs data last week and before the Bank of Japan starts a two-day meeting. The Australian and New Zealand dollars declined after Chinese data showed imports unexpectedly fell in Asia’s biggest economy.

“I expect the dollar to be resilient because of lingering expectations that the Fed will taper monetary easing,” said Daisaku Ueno, a senior foreign-exchange and fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo. “In Japan, there’s a sense that the BOJ will introduce additional easing at some point.”

The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against currencies of six U.S. trading partners, climbed 0.2 percent to 81.857 as of 8:34 a.m. in Tokyo from June 7, when it added 0.2 percent.

The dollar rose 0.7 percent to 98.27 yen from June 7, when it touched 94.99, the lowest since April 4. The greenback added 0.1 percent to $1.3202 from the end of last week, when it strengthened 0.2 percent. The euro rose 0.7 percent to 129.90 yen.

The Australian dollar dropped 0.7 percent to 94.31 U.S. cents. New Zealand’s kiwi dollar weakened 0.5 percent to 78.54 U.S. cents.

Fed Watch

U.S. Labor Department figures showed on June 7 that payrolls rose by 175,000 in May after a revised 149,000 increase in April that was smaller than first estimated. The median forecast in a Bloomberg News survey was for a gain of 163,000.

Fed Policy makers led by Chairman Ben S. Bernanke will trim their so-called quantitative easing program to $65 billion a month at the Oct. 29-30 meeting of the Federal Open Market Committee, from the current level of $85 billion, according to the median estimate of economists in a Bloomberg survey.

The Australian and New Zealand dollars dropped after Chinese imports fell, dimming the demand outlook for the South Pacific nations’ exports. Shipments into China fell 0.3 percent in May from a year earlier, down from a 16.8 percent expansion in April, National Bureau of Statistics data showed on June 8.

“The China train is hardly derailing, but it does seem to be running out of puff somewhat for the moment,” Sharon Zollner, a senior economist at ANZ Bank New Zealand Ltd. in Wellington, wrote in a note to clients today. “Weaker Chinese trade and money aggregates data should ensure the AUD and NZD remain under pressure.”

Aussie Shorts

Futures traders increased bets that the Australian dollar will decline against the U.S. dollar to a record, figures from the Washington-based Commodity Futures Trading Commission show.

The difference in the number of wagers by hedge funds and other large speculators on a decline in the Aussie compared with those on a gain -- so-called net shorts -- was 58,550 on June 4, the most bearish in data going back to January 1993.

The BOJ starts a two-day meeting today. The central bank’s board is divided over whether to quell market volatility by doubling to two years the maturity of 0.1 percent loans it extends to banks, according to people familiar with the discussions.

Fifteen of 17 analysts in a Bloomberg survey either forecast that the BOJ will approve two-year operations or say that such a move is possible.

To contact the reporters on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net; Masaki Kondo in Singapore at mkondo3@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net


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