Spanish 10-year bond yields have fallen from the euro-era record of 7.75 percent reached in July to as low as 5.55 percent since ECB President Mario Draghi said the central bank is ready to do “whatever it takes” to preserve the euro. While the ECB unveiled an unlimited debt-purchase program on Sept. 6, Spain’s Prime Minister Mariano Rajoy has held off on a decision about whether to request aid.
Rabobank’s Foley forecasts the euro will slip to $1.26 in the next month amid Spanish concern, but said she may revise her estimate higher.
“I’m becoming less sure that we’re going to get aggressive pullbacks” in the euro, she said. “Everybody knowing that the worse the news, the greater the chance the ECB will be in, means that those pullbacks will be softened.”
The euro appreciated 2 percent in the past three months, according to Bloomberg Correlation-Weighted Indexes that track 10 developed-nation currencies. The dollar fell 3.9 percent and the yen lost 2 percent. European Union leaders will hold a two- day summit in Brussels starting Oct. 18.
“We may see some progress in Spain’s request for rescue toward the EU summit,” said Ken Takahashi, assistant vice president of global markets in New York at Sumitomo Mitsui Trust Bank Ltd. “The downside risk to the euro is limited until that time.”
South Africa’s rand appreciated for a third day against the dollar amid signs labor unrest that shut gold and platinum mines and spread to the transport industry is easing. The currency climbed 0.3 percent to 8.7183 per dollar.
Australia’s currency strengthened after data showed the nation added the most workers since May. The number of people employed climbed 14,500 in September, the statistics bureau said today. That’s almost three times the median estimate of economists surveyed by Bloomberg News. The jobless rate rose to 5.4 percent, the highest since April 2010, from 5.1 percent the prior month.
“The rise in the unemployment rate comes down to a rising participation rate,” Todd Elmer, head of Group-of-10 foreign- exchange strategy for Asia excluding Japan at Citigroup Inc. in Singapore, wrote in a report today. “Australia’s dollar may gain further” as the market digests the details of the report.
Australia’s dollar climbed 0.3 percent to $1.0269 and touched $1.0294, the strongest since Oct. 2.
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