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21:32 Thursday 10 June, 2010

Asian currencies gained after regional data that beat economists’ forecasts bolstered optimism economic growth will gather pace, helping spur inflows.

The Bloomberg-JPMorgan Asia Dollar Index reversed a loss after reports showed China’s exports jumped 48.5 percent in May, Australia’s jobless rate fell and Thai consumer confidence rebounded. South Korea’s won pared a loss of as much as 1.8 percent that was triggered by comments from a finance ministry official saying regulators plan to take measures to reduce volatility in capital flows.

“The data indicates Asia’s economy is quite resilient to external risk factors such as Europe’s crisis,” said Hideki Hayashi, a global economist at Mizuho Securities Co. in Tokyo. “Asia’s growth will outpace the rest of the world and that means money will return to the region, supporting currencies.”

Malaysia’s ringgit gained 0.3 percent to 3.3080 per dollar as of 4:02 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. The Taiwan dollar climbed 0.1 percent to NT$32.49, according to Taipei Forex Inc. The Asia Dollar Index, which tracks the region’s 10 most-used currencies excluding the yen, rose 0.1 percent, after dropping as much as 0.2 percent.

Developing Asia may grow 8.7 percent in 2010, outpacing a 3.1 percent expansion in the U.S. and 1.9 percent for Japan, according to estimates released by the International Monetary Fund on April 21. Risks to the world’s economic outlook have “risen significantly,” the IMF said yesterday, reiterating that Asia will continue to spearhead the global recovery.

21:29 Thursday 10 June, 2010

The euro rose against the dollar and the yen after economic reports in Asia showed growth is accelerating and a Spanish notes auction drew higher demand than at an earlier sale.

The 16-nation currency climbed for the third consecutive day versus the dollar, its longest run of gains in almost three weeks. The New Zealand and Australian dollars advanced as New Zealand central bank Governor Alan Bollard raised the key interest rate from a record low and Australia’s jobless rate fell. The euro extended gains after Reuters reported the head of China’s pension fund said the shared currency will survive Europe’s debt crisis, and it stayed higher as the European Central Bank kept its main rate at a record low 1 percent.

“There’s a vote of confidence in the euro from Asia, and that provides a much-needed support for the currency.” said Neil Jones, head of European hedge fund sales at Mizuho Corporate Bank Ltd. “The Spanish bond auction helped. Investors confidence towards euro is a strong function of the success or otherwise of sovereign bond sales. It’s an issue very much at the nerve center to decision whether to hold or sell the euro.”

The euro climbed to $1.2045 as of 12:50 p.m. in London, from $1.1979 in New York yesterday. It fell to $1.1877 on June 7, the weakest level since March 2006. The shared currency rose to 109.85 yen, from 109.37. It reached 108.08 yen on June 7, the lowest level since November 2001. The dollar was at 91.22 yen, from 91.30.

15:10 Wednesday 10 June, 2010

Goldman Sachs Group Inc. reversed a forecast for the euro to rise, saying it will fall to a seven- year low of $1.15 as the concerns about sovereign debt and political uncertainty spur investors to sell the currency.

The euro weakened 2.5 percent last week and traded at a four-year low of $1.1877 on June 7, less than the New York-based investment bank’s previous target of $1.35. Emerging-market currencies including the Mexican peso, South Korean won and Malaysian ringgit will appreciate at a slower pace, the bank said. Goldman also lowered estimates for the Australian dollar and British pound.

“European politics remained a major source of uncertainty,” analysts including Thomas Stolper at Goldman Sachs in London wrote in the note to clients. “The likelihood of continued policy mishaps remains very high in the near term and as a result the euro will likely remain under pressure.”

The shared currency will probably trade at $1.15 in three and six months and at $1.25 in 12 months, down from $1.35 previously at all three forecast horizons, Goldman said in the report. One euro bought $1.2057 as of 1:28 p.m. in Tokyo, from $1.1979 yesterday in New York.

15:07 Thursday 10 June, 2010

The euro gained against the dollar and yen as better economic data in the Asia-Pacific region boosted demand for higher-yielding currencies.

The Aussie and kiwi dollars climbed as New Zealand central bank Governor Alan Bollard raised the key interest rate from a record low and Australia’s jobless rate fell. Asian stocks advanced for the second day this week as China’s exports jumped 48.5 percent in May from a year earlier, the biggest gain in more than six years. The euro also strengthened as Reuters reported that the head of China’s pension fund said the 16- nation currency will survive Europe’s debt crisis.

“The numbers generally have been fairly robust into the second-quarter and the real uncertainty is what happens in the second half of the year,” said Mitul Kotecha, head of global currency strategy in Hong Kong at Credit Agricole CIB. “Euro- dollar will struggle to stay above the $1.20 level.”

The euro climbed to $1.2033 as of 12:55 p.m. in Tokyo from $1.1979 in New York yesterday. It fell to as low as $1.1877 on June 7, the weakest since March 2006. Europe’s common currency rose 0.4 percent to 109.84 yen. It reached 108.08 yen on June 7, the least since November 2001. The dollar was at 91.22 yen from 91.30.

08:06 Thursday 10 June, 2010

The Canadian dollar rose for a third day, the longest winning streak in almost a month, as crude oil, the nation’s biggest export, increased and investors sought the currencies of nations with relatively strong balance sheets.

The Canadian dollar, known as the loonie, trimmed its gains as stocks declined. The loonie has appreciated against 13 of its 16 most-traded counterparts this month as Europe’s debt crisis drove investors toward relatively safer assets.

“Our government fiscal position is so solid relative to other countries that Canadian assets become attractive in the market,” Sacha Tihanyi, a currency strategist at Bank of Nova Scotia, said by the phone from Toronto. “Canada gets a safe haven bid in a sense.”

The Canadian dollar rose as much as 1.1 percent to C$1.0365 before trading at C$1.0440 per U.S. dollar at 4:18 p.m. in Toronto, from C$1.0475 yesterday. Its three-day winning streak is the longest since a four-day period ended May 12. One Canadian dollar buys 95.79 U.S. cents.

08:01 Thursday 10 June, 2010

The U.S. Senate will vote within two weeks on a measure aimed at getting China to raise the value of its currency, Senator Charles Schumer of New York said today.

Schumer, a Democrat and lead sponsor of the legislation, said lawmakers are frustrated at what they say is China’s link of the yuan to the dollar and the inability of U.S. Treasury Secretary Timothy F. Geithner to force a change in policy.

“I am confident that it will pass with overwhelming support,” Schumer told the U.S.-China Economic and Security Review Commission in Washington. “Treasury’s failure to call China out on its illegal currency and trade practices is disappointing to say the least.”

Schumer said he aims to attach the measure as an amendment to a bill proposed by the Obama administration to increase lending to small businesses.

Lawmakers are prodding President Barack Obama to take a tougher line on China, which has held the value of the yuan at about 6.83 to the dollar since July 2008. Senator Sherrod Brown, an Ohio Democrat, said today that a weak yuan gives Chinese exporters an unfair advantage over their U.S. competitors.

07:59 Thursday 10 June, 2010

Brian Sack, the Federal Reserve Bank of New York’s markets group chief, said the central bank’s decision in May to restart swap lines with counterparts in Europe, Canada and Japan was a “preemptive” move to help bolster market confidence.

“From the perspective of the Federal Reserve, the liquidity swap arrangements are safe,” Sack said during a speech to the New York Association for Business Economics today. He described the Fed as taking a “limited and supportive role” in stemming the European debt crisis, saying “the successful resolution of these problems ultimately rests on European policy actions.”

By restarting its emergency currency-swap tool, the Fed agreed to provide as many dollars as needed to the foreign central banks to help keep Europe’s sovereign-debt crisis from spreading to more markets. The Fed’s action last month came as European policy makers unveiled an unprecedented loan package worth almost $1 trillion to stop a crisis that threatened to shatter confidence in the euro.

“The swaps were essentially put in place in a preemptive manner, under the view that their presence would provide a backstop for dollar funding markets and help to bolster market confidence,” said Sack, a former Fed economist and section head who returned to the central bank system last year.

07:55 Thursday 10 June, 2010

The dollar fell versus the yen after the Federal Reserve’s Beige Book business survey showed subdued U.S. economic growth, increasing speculation the central bank won’t raise interest rates any time soon.

The euro erased gains versus the dollar and fell against the yen as stocks reversed an advance and dropped, reducing demand for riskier assets before the European Central Bank announces an interest-rate decision tomorrow.

“The Beige Book shows the weakness and the tepidness of the U.S. economy, and that’s likely to undermine the risk trade in the short run,” said Brian Dolan, chief strategist at FOREX.com, a unit of online currency trading firm Gain Capital in Bedminster, New Jersey. “The Fed is going to maintain this easy interest-rate policy for the foreseeable future. I don’t think anyone’s expecting very much from ECB, though it’s important they continue to buy bonds.”

The dollar weakened 0.2 percent to 91.30 yen at 5 p.m., from 91.46 yesterday. The euro was little changed at $1.1979, after earlier gaining as much as 0.8 percent to touch $1.2074, from $1.1973. It fell less than 0.1 percent to 109.32 yen, from 109.51 yen.

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