The dollar traded at almost the strongest since August 2009 versus the yen as signs the American economy is gaining momentum boosted demand for the U.S. currency.
The Dollar Index traded at almost the highest in seven months before reports this week that economists said will show retail sales improved in February and consumer prices increased. Hungary’s forint slid to a nine-month low versus the euro on concern central-bank President Gyorgy Matolcsy is concentrating power in a bid to reshape monetary policy making. The pound and the yen fell against the greenback for a fourth-straight day.
“The market has run a long way in terms of dollar strength,” Sebastien Galy, a foreign-exchange strategist in New York at Societe Generale SA, said in a telephone interview. “We’re probably mostly in a phase of consolidations, with one exception in short sterling, which still attracts as a bearish trade on Europe.”
The dollar rose 0.1% to 96.13 yen at 9:26 a.m. in New York after climbing to 96.55 on March 8, the highest level since Aug. 11, 2009. The U.S. currency was little changed at $1.2998 per euro. The yen depreciated 0.1% to 124.93 per euro after sliding to 125.92 on March 8, the weakest since Feb. 14. Sterling fell 0.3% to $1.4881.
Retail Sales
U.S. retail sales rose 0.5% in February after a 0.1% gain in January, according to a Bloomberg News survey before the Commerce Department data on March 13. A separate report on March 15 will show the consumer-price index climbed 0.5%, after being little changed in January. The jobless rate fell to a four-year low of 7.7%, the Labor Department said last week.
The threat of across-the-board cuts in government spending -- known as sequestration -- failed to deter households, economists said.
The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six U.S. trade partners, gained 0.1% to 82.777 after climbing to 82.924 on March 8, the highest since Aug. 3.
“There are still some headwinds in the U.S. economy coming from its fiscal outlook but the recent data suggested the economic recovery is probably robust enough to accommodate the fiscal setback,” said Jane Foley, a senior foreign-exchange strategist at Rabobank International in London. “That should be positive for the dollar.”
Market Measure
The dollar has appreciated 3.3% this year, the best performer after Sweden’s krona of the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes, on speculation stronger U.S. growth will prompt the Federal Reserve to reduce the pace of bond purchases. The euro rose 1.6%, while the yen tumbled 7.8%.
The forint slid the most since December after Matolcsy stripped two of his deputies appointed under a previous government of some of their powers on March 8. He shifted responsibility to Adam Balog, a vice president appointed by Prime Minister Viktor Orban’s cabinet this month.
Investors interpreted the decision “as evidence that drastic changes in the monetary policy toolkit would be announced soon,” weakening the forint, Mariann Trippon, a Budapest-based economist at Intesa Sanpaolo SpA’s CIB unit, wrote in a research report today.
The forint slid 1.3% to 303.29 per euro after weakening to 303.61, the lowest since June 4. The currency fell as much as 1.4%, the most since Dec. 21.
Won Weakness
The won fell to the lowest since October against the dollar after North Korea’s Committee for the Peaceful Reunification of Korea said it would target the South incoming defense minister.
Kim Byung Kwan, a former general who commanded the U.S.- South Korea Combined Forces, will be the “first target in the great war for national reunification,” the committee said in a statement carried by the official Korean Central News Agency yesterday. Kim said in his March 8 confirmation hearing the South will respond to a North Korean artillery attack by toppling the regime, Yonhap News reported.
“The won is coming under selling pressure as the North Korean threat prompts dollar buying,” said Jeon Seung Ji, a currency analyst at Samsung Futures Inc. in Seoul. “Some exporters are waiting to settle their deals near the level, which may provide some buffer to the won.”
The won dropped 0.4% to close at 1,095 per dollar after sliding to 1,102.65, the lowest since Oct. 25.
Yen Down
The yen weakened versus most of its 16 major counterparts after Japan’s Cabinet Office said machine orders fell 13.1% in January, exceeding the median forecast in a Bloomberg survey for a 1.7% decline.
Haruhiko Kuroda, the nominee for central bank governor, told Japanese lawmakers today the central bank should consider buying large amounts of longer-maturity debt to achieve its 2% inflation target as soon as possible. The yen won’t weaken forever amid expectations for more easing, he said.
“There are expectations for further monetary easing because of the stance that Kuroda has shown, while people are starting to look to a possible exit strategy in the U.S. amid the mild economic recovery,” said Kengo Suzuki, a currency strategist at Mizuho Securities Co. in Tokyo. “The prevailing atmosphere is higher risk appetite and a weaker yen.”
