Dollar Gains as Fed Minutes Signal Unabated Tapering; Baht Falls

The dollar gained the most in three weeks after Federal Reserve policy makers signaled emerging-market turmoil and economic reports that have fallen short of forecasts won’t interrupt stimulus-tapering plans.

The U.S. currency strengthened versus most of its 16 major peers, including those of commodity producers Canada and Australia, as Treasury yields rose after “several” central bank officials said “there should be a clear presumption in favor of continuing” the pace of bond-buying reductions, barring a change in the economic outlook. Emerging-market currencies weakened as anti-government protests escalated in Ukraine and Thailand.

The Bloomberg Dollar Spot Index, which tracks the currency against 10 major counterparts, added 0.3 percent to 1,020.16 as of 5 p.m. in New York, the largest increase on a closing basis since Jan. 30.

The yen rose 0.1 percent to 102.31 per dollar after dropping 0.4 percent yesterday, and Japan’s currency rose 0.2 percent to 140.51 per euro. The dollar gained 0.2 percent to $1.3733 per euro after sliding to $1.3739.

(Source: Bloomberg)

Yen Slides as Bank of Japan Boosts Lending; Forint Declines

The yen slid to the weakest this month against the dollar and the euro after the Bank of Japan boosted its lending programs and said it will maintain monetary easing to stamp out deflation.

The dollar erased gains against a basket of peers after a gauge of manufacturing growth slowed more than forecast. Hungary’s forint declined versus most of its main counterparts as the central bank dropped the two-week deposit rate to a record low. The Thai baht fell with most emerging-market currencies as police clashed with protesters in Bangkok. Investors outside the U.S. increased holdings of Treasuries the most since 2011.

The yen fell 0.4 percent to 102.36 per dollar at 5 p.m. in New York after depreciating to 102.74, the weakest level since Jan. 31. Japan’s currency slid 0.8 percent to 140.83 per euro and reached 141.03, lowest since Jan. 29. The dollar fell 0.4 percent to $1.3759 per euro and touched $1.377, weakest since Jan. 2.

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 of its major counterparts, was little changed at 1,017.34.

(Source: Bloomberg)

Aussie-Driven Inflation Spurring Worst Bonds: Australia Credit

Australia’s central bank is signaling its success in weakening the currency will spur inflation, adding to pressure on the developed world’s worst-performing bonds.

A surge in yields since Feb. 4 pared returns for the past six months to 1.2 percent, an index of debt due in more than a year shows, the smallest gain of 22 advanced-economy markets tracked by the European Federation of Financial Analysts Societies and Bloomberg. Inflation may reach a two-year high 3.25 percent, the Reserve Bank of Australia said this month. Assistant Governor Christopher Kent said Feb. 14 accelerating economic growth may drive costs higher.

The real yield on Australian bonds after accounting for consumer-price gains will be less than investors earn from Treasuries if the RBA is correct. Policy makers raised their forecast after the currency weakened 14 percent in 2013 and housing costs rose to a record, boosting the odds RBA Governor Glenn Stevens’ next move will be a rate increase.

The RBA dropped its easing bias at the Feb. 4 policy meeting and said inflation last quarter was stronger than expected, possibly because the impact of a lower exchange rate was being passed on more rapidly than anticipated.

(Source: Bloomberg)

Asian Stocks Outside Japan Gain Fourth Day Before Yellen Speech

A gauge of Asian stocks outside Japan rose, extending gains into a fourth day and heading for a two-week high, before Federal Reserve Chairman Janet Yellen delivers her first testimony on monetary policy.

Zijin Mining Group Co. (2899), China’s biggest gold producer, jumped 3.7 percent in Hong Kong as the bullion’s price in Shanghai rallied to the highest this year. Australia & New Zealand Banking Group Ltd., Australia’s third-largest bank by market value, rose 2.2 percent after posting a 13 percent jump in first-quarter cash profit. Cochlear Ltd. sank 9.8 percent in Sydney after reporting first-half results and a second-half estimate that suggest the maker of hearing implants will miss its full-year profit forecast.

The MSCI Asia Pacific excluding Japan Index advanced 0.6 percent to 447.29 as of 9:41 a.m. in Hong Kong. The regional gauge has climbed 2.8 percent from a five-month low on Feb. 5 as equities rebounded from a global rout. Yellen will speak on monetary policy and the outlook for the economy today for the first time since being sworn in as the central bank’s head. Japanese markets are closed for a holiday.

The gauge of Asia-Pacific equities outside Japan dropped 5.2 percent in January for its worst start to a year since 2010 amid concern about the Fed’s stimulus cuts, China’s slowdown and volatility in developing markets. Global equity losses in 2014 peaked at $3 trillion on Feb. 4 and have since narrowed to $1.6 trillion, data compiled by Bloomberg show.

(Source: Bloomberg)

Aussie Stays Higher After Biggest Weekly Advance in Five Months

Jalatama - Australia’s dollar remained higher following its biggest weekly advance in five months before local data this week that may show home prices climbed to a record and employment increased.

Yields on the nation’s three-year government notes touched a one-month high last week as the Reserve Bank of Australia raised its economic growth and inflation forecasts, damping speculation the RBA will cut borrowing costs. Demand for the Aussie and New Zealand dollars was supported after gains in stocks globally boosted the allure of higher-yielding assets.

The Aussie traded at 89.49 U.S. cents as of 11:23 a.m. in Sydney after strengthening 2.3 percent last week, the most since the period ended Sept. 6, to 89.59. It reached 89.99 U.S. cents on Feb. 7, the highest since Jan. 14. New Zealand’s kiwi dollar weakened 0.1 percent to 82.85 U.S. cents.

Australia’s three-year yields fell one basis point to 2.99 percent after rising to as high as 3.03 percent at the end of last week, a level unseen since Jan. 10.

The statistics bureau will probably say tomorrow that its index of home prices in Australia rose 3 percent in the October-December period to the highest on record dating back to 2002, according to the median estimate of economists surveyed by Bloomberg News.

A separate report from the bureau is forecast to show the number of people employed rose 15,000 in January. It unexpectedly dropped 22,600 in December, the first decrease in four months.

The MSCI World Index of shares gained 1.2 percent on Feb. 7 as a government report showed the U.S. jobless rate declined to 6.6 percent, the lowest since October 2008.

(Source: Bloomberg)