Euro weakens as unemployment rises to record high

Yuan Gains

China’s yuan jumped the most since December and strengthened beyond 6.20 per dollar for the first time in 19 years after the central bank set a record reference rate for the currency.

The People’s Bank of China raised the fixing by 0.14%, the most since Feb. 8, to 6.2586 per dollar today. The yuan is allowed to trade 1% on either side of the rate.

The yuan rose 0.15% to close at 6.1986 per dollar in Shanghai, according to prices from the China Foreign Exchange Trade System.

The Aussie dollar gained as the Reserve Bank of Australia kept its key interest rate unchanged and Governor Glenn Stevens said “there are a number of indications that the substantial easing of monetary policy during late 2011 and 2012 is having an expansionary effect on the economy.”

Australia’s currency rose 0.3% to $1.0457 and gained 0.5% to 97.64 yen.

Kiwi Strengthens

New Zealand’s dollar climbed after data showed the nation’s commodity export prices gained the most in more than three years. The kiwi, as the currency is nicknamed, gained 0.7% to 84.32 U.S. cents and touched 84.46, its strongest level since Feb. 20.

The British pound weakened for the first time in four days against the dollar after a report showed U.K. factory output contracted in March more than economists forecast. Sterling touched $1.5116, a 0.7% drop, its biggest since March 8.

The euro declined 1.8% over the past month versus nine developed-nation peers, according to Bloomberg Correlation- Weighted Indexes. The dollar dropped 0.2%, while the yen gained 0.1%.

The common currency slid 2.8% versus the dollar last quarter as inconclusive elections in Italy on Feb. 24-25 left a political deadlock. President Giorgio Napolitano has formed a 10-person committee to negotiate a new government for the nation before his term expires in six weeks.

‘Irreconcilable Positions’

The group will have to overcome “irreconcilable positions” among the political blocs in parliament, Napolitano said on March 30 as he appointed the advisers to carry on the search for common ground.

The delay drags out the uncertainty over budget discipline in the third-largest euro-area economy as cracks in the 17- member currency are exposed by bank-deposit losses imposed in Cyprus in return for a bailout.

“The euro should continue to weaken against a wide range of currency,” Simon Derrick, London-based chief currency strategist at Bank of New York Mellon Corp., said in an interview on Bloomberg Television’s “The Pulse” with Francine Lacqua and Guy Johnson. “For the euro-dollar, $1.23 or $1.24 doesn’t seem entirely unreasonable before the summer.”

Bloomberg News

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