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Dollar at almost 7-week high as service industries top forecasts

By John Detrixhe and Joseph Ciolli, Bloomberg

November 5, 2013 • Reprints

The dollar (NYBOT:DXZ13) rose to an almost seven-week high after a gauge of service industries climbed more than forecast in October, adding to the case for the Federal Reserve to taper monthly bond purchases.

The euro dropped against the yen (FOREX:EURJPY) after European Central Bank Executive Board member Joerg Asmussen said the economic recovery is “still very green” before the bank’s policy meeting this week. Japan’s currency appreciated versus most of its 16 most-traded counterparts as the Bank of Japan’s governor said efforts to dispel the country’s deflation are succeeding. Brazil’s real fell against all major peers.

The dollar rally “continued with fairly decent readings on the Institute for Supply Management” non-manufacturing index, Fabian Eliasson, head of U.S. currency sales in New York at Mizuho Financial Group Inc., said in a phone interview. “Overall, the market turned a little bit dollar positive.”

The Bloomberg U.S. Dollar Index, which tracks the greenback against 10 major currencies, rose 0.3% to 1,015.86 at 3:31 p.m. New York time after touching 1,016.64. The index reached 1,017 yesterday, the highest since Sept. 18.

The yen rose 0.3% to 132.81 per euro after appreciating to 132.37, the strongest level since Oct. 10. Japan’s currency was little changed at 98.56 per dollar. The euro dropped 0.3% to $1.3475 after sliding to $1.3442 yesterday, the weakest since Sept. 18.

Real, Rand

The real declined to the weakest versus the greenback since Sept. 11 as Brazil central-bank President Alexandre Tombini said policy makers must be “especially vigilant” on inflation. The real depreciated 1.9% to 2.2890 per U.S. dollar after touching 2.2939, and has depreciated 2.2% this month, the most among major currencies.

South Africa’s rand weakened against the dollar on concern labor disputes at platinum mines will weigh on the nation’s current-account deficit.

The rand dropped 1.1% to 10.2422 per dollar, bringing its decline this month to 1.9%.

The pound advanced for a fifth day against the euro after U.K. services output accelerated to the fastest in 16 years. Sterling gained 0.8% to 83.96 pence per euro after appreciating to 83.92 pence, the strongest since Oct. 3. The U.K. currency advanced 0.5% to $1.6048.

Yen Support

Bank of Japan Governor Haruhiko Kuroda told reporters in Osaka today that inflation expectations are gradually rising and that it’s too early to debate an exit strategy.

“The optimistic outlook may signal to markets that no additional easing is likely at this time, and that is supportive of the yen,” said Eric Viloria, a senior currency strategist at Gain Capital Group LLC in New York.

The euro slid 1.4% in the past week, the worst performer after Sweden’s krona of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes as a report on Oct. 31 showed the region’s annual inflation rate unexpectedly fell last month. The dollar added 0.8% and the yen rose 0.4%.

“The pressure is piling on the hawks to cut,” Sebastien Galy, a senior foreign-exchange strategist at Societe Generale SA in New York, said of the ECB, which will announce its decision Nov. 7.

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Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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Related Terms
US Federal Reserve 8527bank 6455Bloomberg 5254dollar 3859fed 3336European Central Bank 3208forex 2882European Union 2864Euro 2647Federal Reserve 1207Bank of Japan 1119fx 1080Federal Open Market Committee 773Qe 751Mario Draghi 685Bank of America Corp. 596Connecticut 587Arizona 473UBS AG 455policy makers 323taper 310Institute for Supply Management 296Societe Generale SA 224Royal Bank of Scotland Group Plc 206Haruhiko Kuroda 104non-manufacturing index 62real 46rand 43RBS Securities 34Depository Trust Clearing Corp. 33Sebastien Galy 23Mizuho Financial Group Inc. 21Eric Viloria 20Gain Capital Group LLC 19Alexandre Tombini 19Brian Daingerfield 17Fabian Eliasson 14Joerg Asmussen 12euro area banking union 1

Free Newsletter Modern Trader Follow

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