Euro gains on speculation leaders acting to resolve debt crisis

Kiwi, Pound

The New Zealand Dollar advanced against most of its major counterparts as rallying commodities supported the outlook for exports. The so-called kiwi appreciated 0.5 percent to 81.14 U.S. cents. It rose 0.9 percent to 64.34 yen.

Auckland-based Fonterra Cooperative Group Ltd., the world’s largest dairy exporter, said whole-milk powder prices reached a two-month high. since July 27. The Thomson Reuters/Jefferies CRB Index of raw materials rose for a third day, gaining 0.3 percent.

The British pound climbed as July’s increase in U.K. retail sales added to evidence that the economic slump was less pronounced than previously estimated.

Sterling fell 0.2 percent to 78.53 pence per euro after reaching 78.13 pence, the strongest level since July 31. The pound gained 0.3 percent to $1.5735. It weakened as much as 0.3 percent before the data.

Economic Data

The dollar climbed earlier as building permits jumped to the highest level in four years and jobless claims held steady, reducing speculation the Federal Reserve will extend stimulus next month.

“None of the data has been such that it would really have people change their outlook for the U.S. economy or for that matter what the Fed could do,” said Brian Kim, a currency strategist at Royal Bank of Scotland Group Plc in Stamford Connecticut.

The U.S. central bank has held its target for overnight lending in a range of zero to 0.25 percent since 2008 and plans to keep it there at least through late 2014 to stimulate the world’s biggest economy. The Fed bought $2.3 trillion of mortgage and Treasury debt from 2008 to 2011 in two rounds of quantitative easing, also known as QE1 and QE2.

Dallas Fed President Richard Fisher said in a CNBC interview yesterday that the U.S. economy probably won’t lapse into recession in 2013 and that new stimulus wouldn’t spur growth.

Treasuries Buying

The yen has declined against the dollar as higher yields in the U.S. prompted Japanese investors to buy assets abroad.

Investors in Japan bought $10.4 billion of Treasuries in June, bringing their purchases for 2012 to $61.3 billion and total holdings of the debt to $1.1193 trillion, Treasury data released yesterday show.

That compares with China’s addition of $300 million to its portfolio of U.S. government securities for the month, raising its purchases this year to $12.4 billion and its stake in Treasuries to $1.1643 trillion. Should both countries continue buying at their respective paces through 2012, Japan will end the year with more Treasuries.

Bloomberg News

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