Jan. 3 (Bloomberg) -- The dollar fell the most in two weeks against the euro as signs that manufacturing is expanding in the U.S. and China damped demand for haven assets.
The greenback weakened versus all but one of its 16 major counterparts before a U.S. report that economists say will show manufacturing grew at the fastest pace in six months, after data this week showed gains in gauges for China and India.
The Australian and New Zealand dollars strengthened for a fourth day as Asian stock gains spurred demand for higher-yielding assets.
“If the world economy, in particular the key Asian economies, can avoid a really sharp slowdown in growth, some of the currencies that are more sensitive to that global story are probably going to hold up fairly well,” said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. in Singapore.
“The risk is obviously that you start to see the U.S. dollar come under a little bit of pressure.”
The dollar fell 0.4 percent to $1.2987 per euro at 8:22 a.m. in London after dropping as much as 0.6 percent, the most since Dec. 21.
The U.S. currency declined 0.1 percent to 76.82 yen. The euro gained 0.3 percent to 99.77 yen after falling to 98.66 yesterday, the weakest since December 2000.
The MSCI Asia Pacific Excluding Japan Index rose 1.2 percent, and the Stoxx Europe 600 Index gained 0.9 percent. Japanese financial markets are shut today for a holiday.
U.S. Manufacturing
The Institute for Supply Management will say its U.S. factory index rose to 53.4 in December from 52.7 the previous month, according to a Bloomberg News survey before today’s report.
Booking for factory goods climbed 2 percent in November after a 0.4 percent drop the previous month, a separate survey showed ahead of the Commerce Department figures tomorrow.
“In the immediate future, we will be looking for solid outcomes” in U.S. data, said Greg Gibbs, a foreign-exchange strategist at Royal Bank of Scotland Group Plc in Sydney. This will “provide a bit of support for other riskier currencies.”
China’s manufacturing purchasing managers’ index rose to 50.3 in December from 49 the prior month, the logistics federation said Jan. 1.
The reading exceeded all forecasts in a Bloomberg News survey. India’s Purchasing Managers’ Index for manufacturing grew at the fastest pace in six months, HSBC Holdings Plc and Markit said yesterday.
The dollar has fallen 0.2 percent in the past week, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies.
The greenback gained 1.1 percent last year, snapping two years of losses. The euro was the worst performer in 2011, sliding 2 percent.
The Australian and New Zealand dollars advanced to the strongest level in three weeks as Asian stocks rallied.
“There’s a bit of optimism and a bit of risk appetite coming into the early part of the new year,” said Thomas Averill, managing director in Sydney at Rochford Capital, a currency and interest-rate risk-management company.
“For the next week or so, they’re going to be fairly well supported,” he said, referring to the Australian and New Zealand currencies.
Australia’s dollar rose 0.7 percent to $1.0304 after climbing to $1.0311, the strongest since Dec. 8. The New Zealand dollar appreciated 0.9 percent to 78.50 U.S. cents.
European Contraction
Gains in the euro were tempered on concern the European debt crisis will hamper economic growth in the region.
European services and manufacturing output shrank for a fourth month in December, according to a Bloomberg survey before a report from London-based Markit Economics tomorrow.
The data will confirm a composite index based on a survey of purchasing managers rose to 47.9 in December from 47 in November, below the 50 that indicates contraction, economists predict.
“This really puts them in a difficult position trying to control their budgets with weak growth and also being forced to conduct austerity measures,” RBS’s Gibbs said. “You would continue to see the euro under some pressure.”
European inflation slowed from the fastest pace in three years in December, a report tomorrow will show according to a separate Bloomberg survey.
The inflation rate in the 17-nation euro area fell to 2.8 percent in December from 3 percent in the previous month, the European Union’s statistics office in Luxembourg is forecast to say.
businessweek.com
The greenback weakened versus all but one of its 16 major counterparts before a U.S. report that economists say will show manufacturing grew at the fastest pace in six months, after data this week showed gains in gauges for China and India.
The Australian and New Zealand dollars strengthened for a fourth day as Asian stock gains spurred demand for higher-yielding assets.
“If the world economy, in particular the key Asian economies, can avoid a really sharp slowdown in growth, some of the currencies that are more sensitive to that global story are probably going to hold up fairly well,” said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. in Singapore.
“The risk is obviously that you start to see the U.S. dollar come under a little bit of pressure.”
The dollar fell 0.4 percent to $1.2987 per euro at 8:22 a.m. in London after dropping as much as 0.6 percent, the most since Dec. 21.
The U.S. currency declined 0.1 percent to 76.82 yen. The euro gained 0.3 percent to 99.77 yen after falling to 98.66 yesterday, the weakest since December 2000.
The MSCI Asia Pacific Excluding Japan Index rose 1.2 percent, and the Stoxx Europe 600 Index gained 0.9 percent. Japanese financial markets are shut today for a holiday.
U.S. Manufacturing
The Institute for Supply Management will say its U.S. factory index rose to 53.4 in December from 52.7 the previous month, according to a Bloomberg News survey before today’s report.
Booking for factory goods climbed 2 percent in November after a 0.4 percent drop the previous month, a separate survey showed ahead of the Commerce Department figures tomorrow.
“In the immediate future, we will be looking for solid outcomes” in U.S. data, said Greg Gibbs, a foreign-exchange strategist at Royal Bank of Scotland Group Plc in Sydney. This will “provide a bit of support for other riskier currencies.”
China’s manufacturing purchasing managers’ index rose to 50.3 in December from 49 the prior month, the logistics federation said Jan. 1.
The reading exceeded all forecasts in a Bloomberg News survey. India’s Purchasing Managers’ Index for manufacturing grew at the fastest pace in six months, HSBC Holdings Plc and Markit said yesterday.
The dollar has fallen 0.2 percent in the past week, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies.
The greenback gained 1.1 percent last year, snapping two years of losses. The euro was the worst performer in 2011, sliding 2 percent.
The Australian and New Zealand dollars advanced to the strongest level in three weeks as Asian stocks rallied.
“There’s a bit of optimism and a bit of risk appetite coming into the early part of the new year,” said Thomas Averill, managing director in Sydney at Rochford Capital, a currency and interest-rate risk-management company.
“For the next week or so, they’re going to be fairly well supported,” he said, referring to the Australian and New Zealand currencies.
Australia’s dollar rose 0.7 percent to $1.0304 after climbing to $1.0311, the strongest since Dec. 8. The New Zealand dollar appreciated 0.9 percent to 78.50 U.S. cents.
European Contraction
Gains in the euro were tempered on concern the European debt crisis will hamper economic growth in the region.
European services and manufacturing output shrank for a fourth month in December, according to a Bloomberg survey before a report from London-based Markit Economics tomorrow.
The data will confirm a composite index based on a survey of purchasing managers rose to 47.9 in December from 47 in November, below the 50 that indicates contraction, economists predict.
“This really puts them in a difficult position trying to control their budgets with weak growth and also being forced to conduct austerity measures,” RBS’s Gibbs said. “You would continue to see the euro under some pressure.”
European inflation slowed from the fastest pace in three years in December, a report tomorrow will show according to a separate Bloomberg survey.
The inflation rate in the 17-nation euro area fell to 2.8 percent in December from 3 percent in the previous month, the European Union’s statistics office in Luxembourg is forecast to say.
businessweek.com
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