China on a decline as Yen takes advantage on third day hike; Kiwi advance
March 13, 2014 5:42 am
The yen moved higher for a third day versus the dollar as indications that development is slowing in China’s economy, the second-largest in the world, increased demand for haven assets.
New Zealand’s dollar rallied against all of its 16 major counterparts after the central bank boosted interest rates in the first exit of record-low borrowing costs by a developed nation. The Swiss franc leaped to the best performing mark against the dollar since 2011 before data tomorrow on Chinese retail sales and factory output. The franc and yen also surge amid the standoff over Ukraine. Commodities sagged down. The euro is marching toward the topmost level since 2011.
“China has been in the frame,” Alan Ruskin, the global head of Group of 10 foreign exchange at Deutsche Bank AG in New York, said in a telephone interview. “China is opaque in terms of what’s going on in the real economy. What isn’t opaque is when commodity prices, which are heavily influenced by China, go down.”
The yen inched up 0.3 percent to 102.76 per dollar at 5 p.m. New York time after advancing 0.2 percent yesterday. Japan’s currency was slightly altered at 142.86 per euro. Europe’s shared currency rallied 0.3 percent to $1.3903 and reached $1.3914 after soaring on March 7 to $1.3915, the peak level since October 2011.
The franc, like the yen a traditional haven currency, recorded a 0.5 percent increase to 87.40 centimes to the greenback and reached 87.35, the most stable mark since October 2011. It hiked 0.2 percent to 1.2152 to the euro.
Low Volatility
Deutsche Bank AG’s Currency Volatility Index, based on three-month implied volatility on nine major currency pairs, was at 7.18 percent, corresponding yesterday’s mark, the weaket since December 2012.
Standard & Poor’s GSCI spot index of raw materials moved lower as much as 1.1 percent before ending the day down 0.7 percent.
The Reserve Bank of New Zealand increased its key interest rate to 2.75 percent, from 2.50 percent, as projected by all 15 economists in a Bloomberg survey. The nation’s currency, nicknamed the kiwi, bolstered 0.6 percent to 85.24 U.S. cents, the topmost mark since October 22.
The euro has increased 1.3 percent against the dollar since March 5, the day before the European Central Bank kept its interest rates unaltered, undermining speculation policy makers would introduce further financial stimulus. ECB President Mario Draghi said inflation is expected to surge gradually.
“People thought the disinflation story in Europe was going to lead to unorthodox policies from the ECB,” Deutsche Bank’s Ruskin said. “Once that’s been dispelled, pretty much ever since then it’s traded in very resilient fashion.”
Europe’s currency
Europe’s shared currency will advance against the dollar to $1.5 dollar by the end of June, said Douglas Borthwick, the head of foreign exchange at Chapdelaine & Co. in New York.
“Peripheral European countries move their money into mainland Europe and the euro, not into the U.S. dollar,” he said. “The U.S. will not be raising rates any time soon, and will remain accommodative.”
The Federal Reserve, which assembles next week, has continue its standard interest-rate target at zero to 0.25 percent since 2008 to support the U.S. economy.
The TAS PRO Navigator, a gauge of trends, divergences and possible reversal points, is nearing levels where the euro’s advances faded twice in the past five years, indicating it may turn. The momentum line in the euro-dollar rate, computed on a monthly basis, increased to a level of 5.97, data recorded by Bloomberg show. When the indicator touched 6.03 in August 2011, the euro went on to plunged down 14 percent in about 11 months.
China Prospects
China’s exports surprisingly decline 18.1 percent in February from a year earlier, customs data on March 8 showed, compared with a projection for a hike of 7.5 percent in a Bloomberg survey. Imports jumped 10.1 percent, leaving an exchange deficit of $23 billion.
“Investor concerns are continuing to build over slowing economic growth in China,” said Lee Hardman, a foreign-exchange strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “The risk is that we see more of a spillover and a shakeout in risk assets. Given the yen has been the main funding currency of the past year, there’s a risk that short positions could be unwound.” A short position is a bet an asset will fall.
The yen has soared 2 percent this year, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The euro appreciated 0.5 percent, while the dollar slumped 0.8 percent.
Lira Soars
Turkey’s lira bolsters for the first time in four days after the nation’s current-account deficit narrowed in January from a year earlier as a weaker currency increased exports. The lira backslide 22 percent versus the dollar in the 12 months through January, driven by a global investor exodus from emerging markets and political turmoil in Turkey.
The lira rallied 0.6 percent today to 2.2322 per dollar. It was the highest among the greenback’s 31 major counterparts and among 24 emerging-market currencies.
The Indian and Indonesian currencies dropped against most of the dollar’s 31 most-traded counterparts. Indonesia’s rupiah missed 0.3 percent to 11,425 per dollar, and India’s rupee lost 0.4 percent, its largest decline on a closing basis since March 3, to 61.22 to the U.S. currency.
“Some of these countries needed a weaker currency to make sure they stayed competitive,” Jim O’Neill, Bloomberg View columnist and former chairman of Goldman Sachs Asset Management, said in an interview with Scarlet Fu and Tom Keene on Bloomberg Television. “Macro-policy wise, Indonesia and especially Rajan, central bank governor of India, these guys are doing a better job.”Raghuram Rajan is governor of the Reserve Bank of India.
‘Never Surrender’
President Barack Obama called Russia’s incursion into Crimea a violation of international law and told Ukrainian Prime Minister Arseniy Yatsenyuk that the U.S. stands with his country to guard down its sovereignty and territory. Yatsenyuk, who met with Obama at the White House, said he’ll “never surrender.”
Russia has stood by deposed Ukrainian President Viktor Yanukovych and called possible U.S. support to the new government in Kiev illegal. Russia considers the ousting of Yanukovych by Ukrainian lawmakers a coup.
The material has been provided by InstaForex Company – www.instaforex.com
The yen moved higher for a third day versus the dollar as indications that development is slowing in China’s economy, the second-largest in the world, increased demand for haven assets.
New Zealand’s dollar rallied against all of its 16 major counterparts after the central bank boosted interest rates in the first exit of record-low borrowing costs by a developed nation. The Swiss franc leaped to the best performing mark against the dollar since 2011 before data tomorrow on Chinese retail sales and factory output. The franc and yen also surge amid the standoff over Ukraine. Commodities sagged down. The euro is marching toward the topmost level since 2011.
“China has been in the frame,” Alan Ruskin, the global head of Group of 10 foreign exchange at Deutsche Bank AG in New York, said in a telephone interview. “China is opaque in terms of what’s going on in the real economy. What isn’t opaque is when commodity prices, which are heavily influenced by China, go down.”
The yen inched up 0.3 percent to 102.76 per dollar at 5 p.m. New York time after advancing 0.2 percent yesterday. Japan’s currency was slightly altered at 142.86 per euro. Europe’s shared currency rallied 0.3 percent to $1.3903 and reached $1.3914 after soaring on March 7 to $1.3915, the peak level since October 2011.
The franc, like the yen a traditional haven currency, recorded a 0.5 percent increase to 87.40 centimes to the greenback and reached 87.35, the most stable mark since October 2011. It hiked 0.2 percent to 1.2152 to the euro.
Low Volatility
Deutsche Bank AG’s Currency Volatility Index, based on three-month implied volatility on nine major currency pairs, was at 7.18 percent, corresponding yesterday’s mark, the weaket since December 2012.
Standard & Poor’s GSCI spot index of raw materials moved lower as much as 1.1 percent before ending the day down 0.7 percent.
The Reserve Bank of New Zealand increased its key interest rate to 2.75 percent, from 2.50 percent, as projected by all 15 economists in a Bloomberg survey. The nation’s currency, nicknamed the kiwi, bolstered 0.6 percent to 85.24 U.S. cents, the topmost mark since October 22.
The euro has increased 1.3 percent against the dollar since March 5, the day before the European Central Bank kept its interest rates unaltered, undermining speculation policy makers would introduce further financial stimulus. ECB President Mario Draghi said inflation is expected to surge gradually.
“People thought the disinflation story in Europe was going to lead to unorthodox policies from the ECB,” Deutsche Bank’s Ruskin said. “Once that’s been dispelled, pretty much ever since then it’s traded in very resilient fashion.”
Europe’s currency
Europe’s shared currency will advance against the dollar to $1.5 dollar by the end of June, said Douglas Borthwick, the head of foreign exchange at Chapdelaine & Co. in New York.
“Peripheral European countries move their money into mainland Europe and the euro, not into the U.S. dollar,” he said. “The U.S. will not be raising rates any time soon, and will remain accommodative.”
The Federal Reserve, which assembles next week, has continue its standard interest-rate target at zero to 0.25 percent since 2008 to support the U.S. economy.
The TAS PRO Navigator, a gauge of trends, divergences and possible reversal points, is nearing levels where the euro’s advances faded twice in the past five years, indicating it may turn. The momentum line in the euro-dollar rate, computed on a monthly basis, increased to a level of 5.97, data recorded by Bloomberg show. When the indicator touched 6.03 in August 2011, the euro went on to plunged down 14 percent in about 11 months.
China Prospects
China’s exports surprisingly decline 18.1 percent in February from a year earlier, customs data on March 8 showed, compared with a projection for a hike of 7.5 percent in a Bloomberg survey. Imports jumped 10.1 percent, leaving an exchange deficit of $23 billion.
“Investor concerns are continuing to build over slowing economic growth in China,” said Lee Hardman, a foreign-exchange strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “The risk is that we see more of a spillover and a shakeout in risk assets. Given the yen has been the main funding currency of the past year, there’s a risk that short positions could be unwound.” A short position is a bet an asset will fall.
The yen has soared 2 percent this year, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The euro appreciated 0.5 percent, while the dollar slumped 0.8 percent.
Lira Soars
Turkey’s lira bolsters for the first time in four days after the nation’s current-account deficit narrowed in January from a year earlier as a weaker currency increased exports. The lira backslide 22 percent versus the dollar in the 12 months through January, driven by a global investor exodus from emerging markets and political turmoil in Turkey.
The lira rallied 0.6 percent today to 2.2322 per dollar. It was the highest among the greenback’s 31 major counterparts and among 24 emerging-market currencies.
The Indian and Indonesian currencies dropped against most of the dollar’s 31 most-traded counterparts. Indonesia’s rupiah missed 0.3 percent to 11,425 per dollar, and India’s rupee lost 0.4 percent, its largest decline on a closing basis since March 3, to 61.22 to the U.S. currency.
“Some of these countries needed a weaker currency to make sure they stayed competitive,” Jim O’Neill, Bloomberg View columnist and former chairman of Goldman Sachs Asset Management, said in an interview with Scarlet Fu and Tom Keene on Bloomberg Television. “Macro-policy wise, Indonesia and especially Rajan, central bank governor of India, these guys are doing a better job.”Raghuram Rajan is governor of the Reserve Bank of India.
‘Never Surrender’
President Barack Obama called Russia’s incursion into Crimea a violation of international law and told Ukrainian Prime Minister Arseniy Yatsenyuk that the U.S. stands with his country to guard down its sovereignty and territory. Yatsenyuk, who met with Obama at the White House, said he’ll “never surrender.”
Russia has stood by deposed Ukrainian President Viktor Yanukovych and called possible U.S. support to the new government in Kiev illegal. Russia considers the ousting of Yanukovych by Ukrainian lawmakers a coup.
The material has been provided by InstaForex Company – www.instaforex.com
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