The dollar rose against most of its major counterparts amid speculation turmoil in Egypt will worsen, boosting demand for the safety of U.S. assets.
The greenback headed for a third weekly gain versus the euro after Egyptian President Hosni Mubarak defied calls for his immediate resignation, agreeing only to delegate powers until a September election. Australia’s currency slid below parity with the dollar after Reserve Bank Governor Glenn Stevens said policy makers judged it “sensible” to keep interest rates on hold. U.S. consumer confidence rose this month, data showed. “Everyone is more fixated on Egypt, and it’s hurting sentiment,” said Win Thin, global head of emerging market strategy at Brown Brothers Harriman & Co. in New York. “When this risk pressure pops up, that’s when the dollar gets a bit more in favor.”
The dollar appreciated 0.4 percent to $1.3555 per euro at 10:53 a.m. in New York, from $1.3603 yesterday, when it rallied 1 percent. The greenback has gained 0.2 percent this week against the common currency. The dollar advanced 0.1 percent to 83.35 yen. The euro declined 0.2 percent to 112.94 yen.
The euro remained lower versus most counterparts as the German government said Bundesbank President Axel Weber will resign from his post on April 30. The decision takes him out of the race to succeed Jean-Claude Trichet as European Central Bank chief when Trichet’s term expires on Oct. 31.
U.S. Yields Fall
The yen pared its loss against the dollar as yields on U.S. Treasuries extended declines, damping the appeal of dollar- denominated debt. The yield on the benchmark 10-year note fell eight basis points, or 0.08 percentage point, to 3.61 percent.
Canada’s dollar rose against all of its 16 most-traded peers as the nation unexpectedly posted its first trade surplus in 10 months and the U.S. trade deficit widened 5.9 percent to $40.6 billion, in line with forecasts. The Canadian currency gained 0.9 percent to C$1.3412 per euro.
Sweden’s krona slid against the dollar as equities declined, with the OMX Stockholm 30 Index touching to its lowest level since Dec. 1.
The krona depreciated as much as 1.3 percent to 6.5423 per dollar, its weakest level since Jan. 31, and headed for a weekly drop of 0.3 percent.
IntercontinentalExchange Inc.’s Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, climbed as much as 0.6 percent to 78.697, the highest level since Jan. 21. The gauge has risen 0.5 percent this week in what would be its first five-day rally since Jan. 7.
Resort Town
Mubarak and his family left Cairo and arrived at the resort town of Sharm El-Sheikh, Al Arabiya television and the Associated Press reported without citing sources. Mubarak said yesterday he intended to stay on as president until the elections, while handing day-to-day powers to Vice President Omar Suleiman.
Protests in Egypt, inspired by the revolt that ousted Tunisian President Zine El Abidine Ben Ali on Jan. 14, sparked concern that tension would spread in a region that holds more than 50 percent of the world’s known oil reserves.
“The surprising events in Egypt caused a little bit of a roil in the market,” said Steve Butler, director of foreign- exchange trading in Toronto at Bank of Nova Scotia’s Scotia Capital unit. “We’ve seen the market looking for a little bit of protection and with that, flocking to the U.S. dollar.”
Stocks were little changed after the MSCI World Index fell earlier as much as 0.5 percent and the Standard & Poor’s 500 Index dropped as much as 0.4 percent.
The dollar was poised for a 1.4 percent weekly gain versus the yen, its biggest since Jan. 7.
U.S. Confidence Rises
The Thomson Reuters/University of Michigan preliminary index of consumer sentiment rose to 75.1, the highest level since June, from 74.2 in January, in line with the median forecast of economists in a Bloomberg News survey.
Australia’s dollar moved below parity with its U.S. counterpart for the first time in almost two weeks, weakening for a third day, as Stevens said in parliamentary committee testimony that there was no urgency to boost borrowing costs in the first half of the year. That led traders to cut bets on the amount rates would be increased over the next 12 months.
“Stevens is leaning toward the dovish side, and that saw the Aussie drop, with his comments taking a rate hike out of the immediate picture,” said Tim Waterer, a foreign-exchange dealer at CMC Markets in Sydney.
Traders lowered their prediction for the amount of interest-rate increases by the Reserve Bank over the next 12 months to 35 basis points from 41 basis points yesterday, according to a Credit Suisse Group AG index based on swaps.
South Korean Won
Australia’s currency fell 0.4 percent to $1.0008, from $1.0044. It dropped as much as 0.8 percent to 99.61 U.S. cents, the lowest level since Jan. 31.
South Korea’s won decreased for a third day after the central bank kept its benchmark rate at 2.75 percent, a result predicted by only 3 of 12 economists in a Bloomberg News survey. The others forecast an increase. The currency depreciated 1.1 percent to 1,128.47 per dollar, after sliding to 1,128.70, the weakest since Jan. 11.
Source: Bloomberg By
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