The euro gained from a three-week low
versus the dollar as a U.S. manufacturing gauge unexpectedly
rose and Spain’s latest budget and banking measures spurred bets
the euro region is moving closer to containing its debt crisis.
The 17-member currency strengthened versus all of its 16 most-traded peers after Moody’s Investors Service said Spain’s bank recapitalization is positive for the nation’s credit rating. Mexico’s peso gained against most major peers. Federal Reserve Chairman Ben S. Bernanke renewed a pledge to sustain record stimulus even after the U.S. expansion gains strength.
“It’s the beginning of the month and people have the whole quarter to mark their books to ride the wave in riskier assets, and particularly Europe, if there is a wave,” Noel Hebert, chief investment officer at Bethlehem, Pennsylvania-based Concannon Wealth Management LLC, which oversees about $250 million, said in a telephone interview.
The euro appreciated 0.2 percent to $1.2888 at 1:22 p.m. New York time, after dropping earlier as much as 0.4 percent to $1.2804, the weakest since Sept. 11. It strengthened 0.3 percent to 100.53 yen, also erasing a 0.4 percent decline. Japan’s currency was little changed at 77.99 against the greenback.
Europe’s shared currency fell below its 200-day moving average of $1.2824 before erasing losses. It has closed higher than the average every day since Sept. 11.
Stocks rallied, with the Standard & Poor’s 500 Index advancing as much as 1.1 percent.
Australia’s dollar touched the lowest level in more than a year against its New Zealand counterpart before the larger nation’s Reserve Bank holds a policy meeting tomorrow.
The Aussie touched NZ$1.2469, the lowest since September 2011, before erasing losses to trade at NZ$1.2520. The currency slipped 0.1 percent to $1.0364.
The Institute for Supply Management’s U.S. index of U.S. manufacturing rose to 51.5 in September from 49.6 a month earlier, the Tempe, Arizona-based group said today. A Bloomberg survey projected a reading of 49.7 for September. The dividing line between expansion and contraction is 50.
India’s rupee climbed against all of its most-traded peers, gaining 0.9 percent to 52.3950 per dollar.
The euro rose versus major peers even after reports showed manufacturing in the currency bloc contracted for a 14th month in September.
“Much of the negative news has been discounted, and we’re in a position whereby the market is still very hopeful that we’re moving in Europe toward some more positive news with regards to Spain,” said Ian Stannard, head of European foreign- exchange strategy at Morgan Stanley in London. “The euro is going to be very well supported in this environment.”
A gauge of European manufacturing based on a survey of purchasing managers was 46.1, above an initial estimate of 46 on Sept. 20, Markit said today. The index has held for 14 months below 50, indicating contraction.
The euro lost 3.6 percent over the past six months, the biggest drop after the Swiss franc among the 10 developed-nation currencies tracked by Bloomberg Correlation Weighted Indexes. The dollar was little changed, and the yen jumped 6.9 percent.
Sterling weakened against 11 of its 16 most-traded counterparts as a gauge of U.K. factory output, based on a survey by Markit Economics and the Chartered Institute of Purchasing and Supply, fell to 48.4 last month from a revised 49.6 in August. A Bloomberg News survey called for 49.
The pound fell 0.5 percent to 79.91 pence per euro and touched 80.04 pence, the least in a week. It depreciated 0.2 percent to $1.6129 after touching $1.6109 earlier, the weakest level since Sept. 13.
The Fed announced Sept. 13 it would buy $40 billion of mortgage-backed debt a month until the economic recovery is well-established. The U.S. jobless rate has been stuck above 8 percent for 43 straight months.
Bernanke said Fed policy makers “expect that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economy strengthens.” The Fed’s forecast to hold the main interest rate near zero until at least mid-2015 “doesn’t mean that we expect the economy to be weak through” that year, he said in the text of a speech in Indianapolis.
The 17-member currency strengthened versus all of its 16 most-traded peers after Moody’s Investors Service said Spain’s bank recapitalization is positive for the nation’s credit rating. Mexico’s peso gained against most major peers. Federal Reserve Chairman Ben S. Bernanke renewed a pledge to sustain record stimulus even after the U.S. expansion gains strength.
“It’s the beginning of the month and people have the whole quarter to mark their books to ride the wave in riskier assets, and particularly Europe, if there is a wave,” Noel Hebert, chief investment officer at Bethlehem, Pennsylvania-based Concannon Wealth Management LLC, which oversees about $250 million, said in a telephone interview.
The euro appreciated 0.2 percent to $1.2888 at 1:22 p.m. New York time, after dropping earlier as much as 0.4 percent to $1.2804, the weakest since Sept. 11. It strengthened 0.3 percent to 100.53 yen, also erasing a 0.4 percent decline. Japan’s currency was little changed at 77.99 against the greenback.
Europe’s shared currency fell below its 200-day moving average of $1.2824 before erasing losses. It has closed higher than the average every day since Sept. 11.
‘Key Pivot’
“The thing that’s been keeping the euro up today is technicals,” Eric Viloria, senior currency strategist for Gain Capital Group LLC in New York. “That 200-day moving average is something we’ve been looking at for a while, and a lot of people have been talking about it. Even thought there was a test below on an intraday basis, it’s been holding up as support there. It’s a pretty key pivot.” Support is an area on a chart where buy orders may be clustered.Stocks rallied, with the Standard & Poor’s 500 Index advancing as much as 1.1 percent.
Australia’s dollar touched the lowest level in more than a year against its New Zealand counterpart before the larger nation’s Reserve Bank holds a policy meeting tomorrow.
The Aussie touched NZ$1.2469, the lowest since September 2011, before erasing losses to trade at NZ$1.2520. The currency slipped 0.1 percent to $1.0364.
The Institute for Supply Management’s U.S. index of U.S. manufacturing rose to 51.5 in September from 49.6 a month earlier, the Tempe, Arizona-based group said today. A Bloomberg survey projected a reading of 49.7 for September. The dividing line between expansion and contraction is 50.
Mexico’s Peso
The Mexican peso strengthened after the report boosted the economic outlook for the nation’s chief trading partner. The currency appreciated 0.2 percent to 12.8335 to the greenback.India’s rupee climbed against all of its most-traded peers, gaining 0.9 percent to 52.3950 per dollar.
The euro rose versus major peers even after reports showed manufacturing in the currency bloc contracted for a 14th month in September.
“Much of the negative news has been discounted, and we’re in a position whereby the market is still very hopeful that we’re moving in Europe toward some more positive news with regards to Spain,” said Ian Stannard, head of European foreign- exchange strategy at Morgan Stanley in London. “The euro is going to be very well supported in this environment.”
A gauge of European manufacturing based on a survey of purchasing managers was 46.1, above an initial estimate of 46 on Sept. 20, Markit said today. The index has held for 14 months below 50, indicating contraction.
Spanish Bonds
Spain’s 10-year bonds rose for a third day, pushing the yield down seven basis points, or 0.07 percentage point, to 5.86 percent. The nation commissioned the stress test of its banks as part of terms to win external financial aid of as much as 100 billion euros ($129 billion) for its banking system. They showed a deficit of 59.3 billion euros.The euro lost 3.6 percent over the past six months, the biggest drop after the Swiss franc among the 10 developed-nation currencies tracked by Bloomberg Correlation Weighted Indexes. The dollar was little changed, and the yen jumped 6.9 percent.
Sterling weakened against 11 of its 16 most-traded counterparts as a gauge of U.K. factory output, based on a survey by Markit Economics and the Chartered Institute of Purchasing and Supply, fell to 48.4 last month from a revised 49.6 in August. A Bloomberg News survey called for 49.
The pound fell 0.5 percent to 79.91 pence per euro and touched 80.04 pence, the least in a week. It depreciated 0.2 percent to $1.6129 after touching $1.6109 earlier, the weakest level since Sept. 13.
Dollar Index
The Dollar Index, which IntercontinentalExchange Inc. uses to track the currency against those of six U.S. trading partners, fell 0.2 percent to 79.814 after rising earlier to 80.147, the highest since Sept. 11.The Fed announced Sept. 13 it would buy $40 billion of mortgage-backed debt a month until the economic recovery is well-established. The U.S. jobless rate has been stuck above 8 percent for 43 straight months.
Bernanke said Fed policy makers “expect that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economy strengthens.” The Fed’s forecast to hold the main interest rate near zero until at least mid-2015 “doesn’t mean that we expect the economy to be weak through” that year, he said in the text of a speech in Indianapolis.
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