Yen breaches 100 per dollar for first time in month

European Rate

The European Central Bank will keep its main refinancing rate at a record-low 0.5% on July 4, according to the median prediction of 62 economists in a Bloomberg survey. Policy “will stay accommodative for the foreseeable future,” ECB President Mario Draghi said in Paris on June 26.

The Dollar Index, which IntercontinentalExchange Inc. uses to monitor the greenback against the currencies of six major U.S. trade partners, touched 83.498, the highest since May 31.

Orders placed with U.S. factories increased 2.1% in May, following a revised 1.3% advance the prior month, the Commerce Department reported in Washington. The median forecast of economists in a Bloomberg survey called for a 2% gain. Demand for capital equipment increased more than the government estimated last week.

“The dollar is likely to stay underpinned if data continues to improve,” said Roberto Mialich, a senior currency strategist at UniCredit SpA in Milan. “We see scope for the Fed to be able to start tapering the policy accommodation this year before Fed Chairman Bernanke departs early next year.”

The dollar has climbed 6.7% this year, the best performance among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro was the second- biggest winner, rising 4.9%.

Aussie Drops

Australia’s dollar fell toward an almost three-year low against the U.S. currency after Reserve Bank Governor Glenn Stevens said “it is possible that the exchange rate will depreciate further over time.”

Stevens spoke after policy makers left the benchmark interest at a record-low 2.75%. Traders see about a 39% chance they will cut its key rate next month, based on swaps data compiled by Bloomberg.

“The RBA’s jawboning has worked quite well,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney. “This is probably as large a selloff in the Aussie as you could expect, given that they didn’t touch interest rates. They are probably happy that they can still get a bit of bang for their buck when it comes to the statement.”

The Aussie dropped 0.9% to 91.58 U.S. cents after touching 91.10 yesterday, the lowest since September 2010.

www.bloomberg.com

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