The euro fell against most peers before data today that may show the currency bloc’s jobless rate climbed to a record and manufacturing contracted, boosting prospects the European Central Bank will cut interest rates.
The ECB, which has kept borrowing costs at a record low of 1 percent since December, will probably lower the benchmark rate by 0.25 percentage point on July 5, a Bloomberg News survey of economists shows. The 17-nation currency posted the biggest jump in more than a year versus the yen on June 29 after euro leaders eased terms on loans to Spanish banks, taking a step toward resolving the region’s debt crisis.
“We can’t buy the euro yet,” said Marito Ueda, senior managing director in Tokyo at FX Prime Corp., a currency-margin company. “The outlook for Europe’s economy is still bleak, and it still remains to be seen what economic measures will be undertaken there.”
The euro dropped 0.4 percent to $1.2620 as of 11:50 a.m. in Tokyo from the close in New York on June 29. It fell 0.4 percent to 100.68 yen after rising 2.2 percent at the end of last week, the biggest advance on a closing basis since March 2011. The greenback was little changed at 79.77 yen.
The jobless rate in the euro zone probably rose to 11.1 percent in May from 11 percent the prior month, a Bloomberg News Survey of economists showed. It would be the highest on record going back to 1990.
London-based Markit Economics may confirm its gauge of the currency bloc’s manufacturing was 44.8 in June on a final reading, unchanged from an initial estimate, according to a separate poll of economists. A level below 50 indicates contraction.
Stocks jumped globally on June 29 after euro-area leaders dropped the requirement that governments get preferred creditor status on crisis loans to Spain’s blighted banks. Lenders can also be recapitalized directly with European bailout funds rather than being channeled through governments, European Union President Herman Van Rompuy said after a two-day summit.
“The latest EU summit has clearly bought time for the euro. But it still does not remove the bearish case for the currency,” Mansoor Mohi-uddin, head of foreign-exchange strategy in Singapore at UBS AG, wrote in a note on June 30. “The market is likely to focus on whether the ECB will cut interest rates” at the July 5 meeting.
Futures traders increased their bets that the euro will decline against the dollar, according to figures from the Washington-based Commodity Futures Trading Commission. The difference in the number of wagers by hedge funds and other large speculators on a drop in the euro compared with those on a gain was 159,880 on June 26, up from 141,066 a week earlier. The so-called net shorts reached a record 214,418 on June 5.
HSBC Holdings Plc and Markit Economics today said the final reading of its Chinese manufacturing index was 48.2 in June, down from 48.4 the prior month.
New Zealand’s dollar may climb to the highest in more than two months as its short-term momentum has a “bullish” bias, Niall O’Connor, a New York-based technical analyst at JPMorgan Chase & Co., wrote in a research note yesterday.
The so-called kiwi is facing an ‘important’’ test at the level of 80.60 U.S. cents to 80.90, which sits on a downtrend line from the Feb. 29 high, the analyst wrote. Rising above that level may take the currency toward April highs, according to O’Connor.
The South Pacific nation’s currency jumped as much as 2 percent on June 29 before trading little changed at 80.06 today. It reached 83.20 on April 13, the highest since March 2.