The dollar gained against the majority of its most-traded peers as the economy expanded more than previously estimated in the second quarter and as pending home sales in July exceeded forecasts.
The greenback appreciated against the euro and yen as investors speculated that Federal Reserve Chairman Ben S. Bernanke won’t hint at further monetary stimulus during his speech at a Aug. 31 conference. Europe’s shared currency pared a decline after German Chancellor Angela Merkel said Italy’s “reforms” will help reduce the nation’s interest rates. Sweden’s krona slumped to a four-week low against the euro after a research group predicted the central bank would need to lower interest rates.
“The slightly better U.S. housing number provided a push,” Mike Moran, a senior currency strategist at Standard Chartered in New York, said in a telephone interview. “It solidified the stronger dollar.”
The dollar gained 0.2 percent to $1.2538 per euro at 12:01 p.m. New York time. The greenback strengthened 0.3 percent to 78.73 yen. Europe’s shared currency rose 0.1 percent to 98.71 yen.
The euro has appreciated 0.6 percent in the past month, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-market currencies, amid speculation policy makers will succeed in stemming market turmoil. The dollar has declined 1.3 percent and the yen has fallen 1.7 percent.
Swedish Krona
Sweden’s krona fell against all of its most-traded peers after the National Institute of Economic Research said Sweden’s central bank will cut its main lending rate to 1 percent from 1.5 percent this year to support expansion.
The currency fell 0.5 percent to 8.3495 per euro after dropping to 8.3715, the weakest level since Aug. 1. The krona slid 0.7 percent to 6.6588 per dollar, after tumbling by as much as 1 percent, the biggest intraday decline since July 6.
The Mexican peso decreased against most of its major peers as a shutdown of refineries caused by Hurricane Isaac curbed crude-oil demand. Mexican oil exports accounted for $27.1 billion in revenue in first six months of year, according to preliminary data from a national statistics agency.
The peso fell 0.7 percent to 13.2828 per dollar after declining as much as 0.9 percent to 13.3032, its lowest point since Aug. 3.
Canada’s dollar traded close to a four-month high versus its U.S. peer as investors tempered expectations of further monetary easing from Bernanke. The currency, nicknamed the loonie for the image of the waterfowl on the C$1 coin, gained 0.1 percent to 98.73 cents per U.S. dollar.
The U.S. economy expanded more than previously estimated in the second quarter, reflecting an improvement in the trade deficit and a pickup in household spending on utilities.
Gross domestic product climbed at a 1.7 percent annual rate from April through June, up from an initial estimate of 1.5 percent, revised Commerce Department figures showed today in Washington. The figure followed a 2 percent first-quarter pace and matched the median estimate in a Bloomberg survey.
The index of pending home resales climbed 2.4 percent, exceeding the 1 percent gain median forecast of 39 economists surveyed by Bloomberg News, figures from the National Association of Realtors showed. The gauge rose to 101.7, the highest since April 2010.
‘Gradual Recovery’
“Recent housing-market reports, including data on sales of existing and new homes, have been consistent with stabilization and gradual recovery,” Kathy Lien, managing director of foreign exchange at BK Asset Management, an investment advisory firm in New York, wrote today in a note to clients. “The rally in equities and low level of interest rates have given investors confidence to dip their toes back into the market.”
Bernanke will give a speech in two days at a meeting of central bankers in Jackson Hole, Wyoming, that may shed light on the outlook for U.S. monetary policy as signs of an improving economic outlook dull the case for more stimulus.
“More and more people are getting of the mindset that Bernanke isn’t going to say anything new,” Brian Kim, a currency strategist in Stamford, Connecticut, at Royal Bank of Scotland Group Plc, said in a telephone interview. “You may see euro-dollar come a little lower again on dollar strength because some people might have been pricing in dollar weakness while thinking about QE.”
Europe’s shared currency has climbed 2.6 percent against the dollar since Aug. 1, the day before ECB President Mario Draghi said the central bank may buy Spanish and Italian bonds to cap borrowing costs. He will give a press conference on Sept. 6 in Frankfurt after the next meeting of policy makers.
Italy doesn’t need to tap the rescue fund at the moment because measures by the government are starting to offset market concerns, Italian Prime Minister Mario Monti said in an interview with Il Sole 24 Ore published today.
