Deficit Concern
Fiscal cliff “is the only story out there other than dollar yen, which is trading on its own dynamic,” Greg Anderson, the North American head of G-10 currency strategy at Citigroup Inc. in New York, said in a telephone interview. “If the fiscal cliff doesn’t get averted when foreign-exchange markets are back to full liquidity, let’s say Thursday, Jan. 3, yeah, I expect the dollar to rally at that juncture.”
The dollar has appreciated 0.1 percent in the past week among the 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen slid 2.3 percent and the euro rose 0.4 percent.
The euro dropped after Italy sold 5.9 billion euros of bonds. The Rome-based Treasury auctioned 3 billion euros of 10- year debt at 4.48 percent, up from 4.45 percent at the previous sale on Nov. 29. It also sold 2.9 billion euros of bonds due in 2017 to yield 3.26 percent compared with 3.23 percent Nov. 29.
French gross domestic product rose 0.1 percent in the third quarter, half the pace estimated on Nov. 15, statistics institute Insee in Paris said. Data yesterday showed jobless claims rose for a 19th month in November.
Inflation Reading
The yen weakened earlier today as economic reports fueled speculation the central bank will heed government calls to step up stimulus to end deflation.
Japan’s consumer prices excluding fresh food fell 0.1 percent in November from a year earlier, matching economists’ estimates in a Bloomberg News survey. The Bank of Japan’s inflation target is 1 percent, and Prime Minister Shinzo Abe has said he may change the law governing the central bank if it doesn’t double its price goal.
The yen’s decline may be disrupted for about a month by the fiscal cliff in the U.S. as investors seek a haven in the yen as a reserve currency, John Taylor, founder and chairman of New York-based currency hedge fund FX Concepts LLC, said in an interview with Sara Eisen and Josh Barro on Bloomberg Television’s “Surveillance.”
“I’m now worried,” Taylor said. “I can’t believe these guys.”
