The shared currency advanced versus most of its major peers as a derivatives market showed the most confidence in the area since the 2008 financial crisis. The yen gained against a majority of its most-traded counterparts. New Zealand’s dollar fell after the nation’s trade deficit unexpectedly widened.
“The lingering shutdown risk from the U.S. government is one factor that’s hurting some of the riskier currencies versus the core ones like the yen and euro,” Richard Franulovich, the chief currency strategist for the northern hemisphere at Westpac Banking Corp. in New York, said in a telephone interview.
The euro appreciated 0.2% to $1.3497 per dollar at 9:09 a.m. New York time. The common currency rose 0.2% to 133.27 per yen. The dollar was little changed at 98.74 yen.
The Brazilian real has gained 7.5% versus the greenback this month, while the yen has declined 0.6%. The quarter, New Zealand’s dollar has led all major gainers with a 6.5% increase, while the worst-performing Mexican peso has slipped 0.2%. Denmark’s krone is the best-performing currency in 2013 and the South African rand has plunged 14.3%.
The New Zealand dollar fell for a second day against the dollar after the government said the nation’s trade deficit widened to NZ$1.2 billion ($987 million) in August, the biggest shortfall in five years. The kiwi declined 0.5% to 82.40 U.S. cents.
Sweden’s krona extended its longest losing streak since June as a gauge of consumer confidence fell to 98 in September from 98.8 a month earlier. The nation also sold its remaining 7% stake in Nordea Bank AB, the Nordic region’s largest lender, for 21.6 billion kronor ($3.36 billion) to institutional domestic and international investors, it said today.
The krona dropped 0.5% to 6.4337 per dollar and 0.7% to 8.6846 per euro.
Purchases of new houses in the U.S. climbed 6.6% to a 420,000 annual rate in August after plunging in July by the most in three years, according to economists in a Bloomberg News survey before the Commerce Department data today. Durable goods orders, excluding transportation, decreased 0.1% in August after falling 0.5% the prior month.
The U.S. Senate is set to hold a test vote today on legislation passed by the House of Representatives to cover federal spending through Dec. 15, and choke off funds for President Barack Obama’s health-care law. The debate may extend past a Sept. 30 deadline. The next fiscal year begins Oct. 1.
“While it’s likely that the U.S. will reach a budget deal in the end, the uncertainty surrounding it in the meantime has fueled risk aversion,” said Neil Jones, head of hedge-fund sales at Mizuho Bank Ltd. in London. “The dollar and the yen tend to be supported in an environment where investors are paring back on risky assets.”
The Bloomberg U.S. Dollar Index, which tracks the greenback against 10 major currencies, was little changed at 1,013.59 after climbing 0.2% yesterday.
The euro rose after GfK SE forecast in a report its German consumer-confidence index will rise to 7.1% in October, the highest since September 2007. The Nuremberg-based research company said its measure of economic expectations climbed to 10.7 in September from 1.8 in August.
The derivatives market is showing the most confidence in the euro area since before the financial crisis as the premium traders pay to exchange euro-denominated loans for dollar funding for one-year has fallen to the lowest since March 2008.
The one-year cross-currency basis swap between euros and dollars shrank to minus 8.25 basis points today, from minus 24 at the end of last year, data compiled by Bloomberg show.
A negative swap rate signals that investors are willing to receive reduced euro interest payments to obtain dollar funding, and a smaller spread signals more confidence in the currency.
The euro has gained 5.6% this year, the biggest increased among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar gained 3% and the yen fell 10.8%.