TOKYO, Sept 29: The dollar touched a fresh four-year high against a basket of currencies and started the week close to a six-year peak against the yen, getting a tailwind from data showing higher U.S. growth in the second quarter.
It also rose to a nearly two-year high against the euro, held aloft by divergent market expectations for U.S. and European monetary policy.
Asian market attention turned to Hong Kong, where democracy protesters defied volleys of tear gas and police baton-charges in the centre of the financial hub. The city’s de facto central bank said the Hong Kong dollar was stable after the tense situation had earlier pushed the currency to ts biggest fall in a single day this year.
The Hong Kong dollar, which is closely pegged to its U.S. counterpart, was down slightly on the day at 7.7603 against the greenback.
‘The Hong Kong situation is not a big factor for major currencies now, but it could be one for emerging currencies, which means that probably, it will lead to an even higher dollar,’ said Masashi Murata, a senior currency strategist at Brown Brothers Harriman in Tokyo. Dollar bulls cheered Friday’s report from the U.S. Commerce Department, which raised its estimate of gross domestic product to show the economy expanded at a 4.6 percent annual rate – its fastest pace in 2-1/2 years. The pick up in the economy was broad-based and highlighted a faster pace of business spending and sturdier export growth than previously estimated. The latest data from the Commodity Futures Trading Commission released on Friday showed speculators raised their bullish bets on the U.S. dollar in the week ended Sept. 23. The value of the dollar’s net long position rose to $35.81 billion from $31.42 billion the previous week. The dollar added about 0.1 percent to 109.40 yen, and earlier got within a couple of ticks of last Friday’s six-year peak of 109.54 yen, its loftiest perch since August 2008.
The dollar index, which tracks the U.S. unit against a basket of major rivals, climbed as high as 85.737. It was last up about 0.1 percent on the day at 85.696. The dollar index marked its eleventh straight gaining week, its longest streak since it was allowed to float freely in 1971.
The euro edged down 0.1 percent to $1.2676, after earlier touching a nearly two-year low of $1.2667, and pressure remained on the European unit ahead of euro zone data this week, as well as a central bank meeting. ‘Euro area inflation and sentiment data are expected to remain soft and unlikely to provide a much-needed boost for medium-term inflation expectations,’ Shinichiro Kadota, chief Japan FX strategist at Barclays Bank in Tokyo, said in a note to clients.
The European Central Bank will meet on Thursday, but is not expected to take any steps after it surprised markets with easing measures at its last meeting, including an interest rate cut. ECB President Mario Draghi is likely to remain dovish, and could reveal clues on the central bank’s asset purchase plans.
The key U.S. nonfarm payrolls report on Friday will likely underscore the U.S. economic recovery has enough momentum for the Federal Reserve to hike interest rates sooner rather than later.
Employers likely hired 219,000 people in September, a rebound from August’ s rise of only 142,000. The New Zealand dollar also dropped to a one-year low around $0.7708 and was last down about 1.4 percent at $0.7764 after Reserve Bank of New Zealand data showed that the central bank sold the currency on the open market last month to speed its descent from historic highs. That helped push the Australian dollar as low as $0.8692 , its weakest level in almost eight months and within sight of its January low of $0.8660. The Aussie was last down 0.6 percent at $0.8708.
(AGENCIES)
Follow our WhatsApp channel