Dollar set for best January since 2009 as spending tops forecast

Japan Prices

The yen rose as a report showed today that Japan’s December core consumer prices rose 1.3% from a year earlier, compared with the median estimate for a 1.2% gain in a Bloomberg News survey.

“Better Japanese data suggests reduced chance of more Bank of Japan easing this spring,” said Jane Foley, senior currency strategist at Rabobank International in London. “The trouble in emerging markets could also remain a factor for some weeks and that should provide some support for the yen in the near term.”

The euro was poised for its biggest monthly decline against the dollar since March after the European Union’s statistics office in Luxembourg said consumer prices rose an annual 0.7% after a 0.8% gain in December. The median estimate in a Bloomberg News survey of economists was for an increase to 0.9%.

That’s the fourth consecutive reading of less than 1%. The ECB, which meets on Feb. 6, aims to keep inflation at just under 2%.

ECB Dovish

“I would sell the euro into any rallies,” said Athanasios Vamvakidis, head of Group of 10 currency strategy at Bank of America Merrill Lynch in London. “While we do not expect a rate cut at this meeting, the ECB is likely to sound dovish by expressing concerns about persistently low inflation and signal that further easing is on the table if inflation remains below its projections.”

The ruble fell 14th time in 15 days even after the Russian central bank affirmed unlimited market interventions to keep the currency within its target corridor amid the selloff in emerging markets. Central banks from South Africa and Turkey to Argentina have raised interest rates this week to prop up their currencies.

A devaluation of the Argentine peso triggered a 19% plunge versus the dollar this month, the biggest among 31 major currencies. The rand declined 6.9% and Turkey’s lira dropped 5.4%.

The New Zealand dollar extended its worst start to a year since 2010 after Reserve Bank Governor Graeme Wheeler said today the “exchange rate remains a considerable headwind for the economy, and the bank does not believe its current level is sustainable in the long run.”

The kiwi fell 1% to 80.81 U.S. cents, poised for a 1.6% decline this month.

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