Dollar Falls Versus Euro as Dudley Cites Rate Rise Danger

11:22 PM @ Thursday - 13 November, 2014
The dollar weakened versus the euro after New York Federal Reserve President William C. Dudley said raising interest rates too early poses a bigger risk to the economy than acting too late.

The Bloomberg Dollar Spot Index fell while the Australian and New Zealand currencies rallied. The ruble declined as the European Union weighed adding sanctions against Russia. Switzerland’s franc was at almost the strongest level in more than two years against the euro even as Swiss National Bank Vice President Jean-Pierre Danthine said its 1.20 per-euro cap will stay in place.

“Dudley is known to be on the dovish side, he does tell you the Fed is in no hurry to raise rates,” Jonathan Webb, head of foreign-exchange strategy at a unit of Jefferies International Ltd. in London, said in a telephone interview. “The economic outperformance is the key driver, meaning the dollar can still strengthen.”

The dollar depreciated 0.4 percent to $1.2484 per euro at 10:54 a.m. New York time. The U.S. currency climbed 0.2 percent to 115.72 yen after advancing as much as 0.4 percent. The euro strengthened 0.6 percent to 144.47 yen.

Bloomberg’s dollar index, which tracks the greenback against 10 major peers, slipped 0.1 percent to 1,093.52.

Price Swings

The 14-day average true range of the dollar versus the yen, a volatility gauge which takes into account the differences between intra-day highs and lows, has dropped to 1.16 since reaching 1.27 on Nov. 7, the highest since July 2013. The yen reached 116.10 percent dollar on Nov. 11, the weakest level since 2007.

Hungary’s forint led gains among the 31 major currencies, rising 0.6 percent to 244.93 per dollar. The New Zealand dollar climbed 0.3 percent to 79.04 U.S. cents. The Aussie rose 0.2 percent to 87.37 U.S. cents, after reaching 87.64 U.S. cents, the most since Oct. 31.

The ruble weakened 1.1 percent to 46.4600 per dollar, the biggest loser.

Representatives of the EU’s 28 member states and the U.S. are meeting today in Brussels to discuss imposing added penalties on individuals or on Russia’s economy for the country’s role in the Ukraine conflict, according to diplomats close to the talks. The nation’s economy grew 0.7 percent in the third quarter, above the median forecast for 0.3 percent in a Bloomberg survey.

Franc Cap

Switzerland’s central bank’s currency limit “is going to be in place for the foreseeable future,” Danthine said at a conference in Stockholm today.

The franc appreciated to within 0.2 percent of the SNB cap before a Nov. 30 referendum that, if passed, would require the central bank to increase its gold holdings. That risks making it harder for policy makers to control the exchange rate.

The Swiss currency was little changed at 1.20178 per euro. It strengthened 0.3 percent to 96.35 centimes per dollar.

The pound fell to the lowest in more than a year against the dollar as a property slowdown deepened concern U.K. growth has cooled, reducing pressure on the Bank of England to raise interest rates.

“There are some signs of economic deceleration and external challenges, particularly from the euro zone, which may add downward pressure to the pound in the near term,” said Jeremy Stretch, head of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London.

Pound Loses

Sterling dropped 0.3 percent to $1.5728 after falling to $1.5733, the least since Sept. 11, 2013. It depreciated 0.6 percent to 79.32 pence per euro.

Last month, the Fed ended its bond-purchase program, citing improvement in the U.S. labor market, moving it closer to higher interest rates. Since then, data showed employers added 214,000 workers in October and the unemployment rate fell to a six-year low.

“It’s a stronger euro because we had comments from Dudley,” said Ulrich Leuchtmann, the head of currency strategy at Commerzbank AG in Frankfurt. “Uncertainty regarding the normalization of U.S. monetary policy is popping up with comments like these. I don’t think this will be long-lasting. Dudley is known to be a super dove.”

Jobless claims increased by 12,000 to 290,000 in the week ended Nov. 8, the highest since Sept. 20, a Labor Department report showed today in Washington. The median forecast of 53 economists surveyed by Bloomberg called for 280,000. It was the ninth straight week claims have been less than 300,000.

Investors are betting the first rate increase from the Fed will come in 10 months, Morgan Stanley index data show. Policy makers have kept their benchmark target for overnight lending between banks in a range of zero to 0.25 percent since December 2008.

“The reaction of financial markets to our actions will be important in terms of how fast we go once we start to tighten monetary policy,” Dudley said in Abu Dhabi.
Nguồn:
LinkedInPinterest

OTHERS

More News