The euro slid for a fourth day versus the dollar as data showed German factory orders fell more than analysts forecast in December, while U.S. reports this week are forecast to indicate the nation’s recovery is gaining strength.
The 17-nation shared currency erased earlier gains versus the yen after the Economy Ministry in Berlin reported factory orders dropped 3.4 percent from November. The pound rose against all of its 16 most-traded counterparts on speculation the Bank of England will be forced to raise interest rates to contain inflation. Norway’s krone weakened as crude oil fell and manufacturing in December was less than expected.
“We’re used to some fairly disappointing data coming from the periphery, and it has been the core that has been holding Europe up and driving growth,” said Ian Stannard, a senior currency strategist at BNP Paribas SA in London. “The fact that we are seeing weaker data at the core of Europe as well is a worrying sign for the euro.”
The euro dropped 0.4 percent to $1.3521 at 9:20 a.m. in New York, the weakest since Jan. 21, after rising earlier to $1.3627. The single currency fell 0.3 percent to 111.33 yen, from 111.62 yen on Feb. 4. The dollar strengthened 0.2 percent to 82.31 yen, from 82.18.
The MSCI World Index gained 0.2 percent, and futures on the Standard & Poor’s 500 Index rose 0.3 percent. Copper climbed to records in London and New York as investors speculated a U.S. economic recovery is under way.
U.S. Consumer Credit
A report today is forecast to show consumer borrowing in the U.S. rose in December for a third month. Credit climbed by $2.5 billion after increasing $1.3 billion in November, the Federal Reserve will say today in Washington, according to the median forecast of 25 economists in a Bloomberg survey.
Economists had forecast a 1.5 percent decline in German factory orders, according to the median of 37 estimates in a Bloomberg News survey.
Norway’s krone was the worst performer against the dollar as oil futures touched the lowest level in more than a week, $88.28 a barrel in New York. The currency declined for a fourth day against the greenback as data showed Norwegian manufacturing production fell 1 percent in December, compared with a 0.5 percent gain forecast in a Bloomberg survey.
The krone weakened 0.5 percent against the dollar to 5.7842, from 5.7558 on Feb. 4. The pound rose as short-term interest rates increased. The two-year gilt yield climbed six basis points to 1.58 percent after reaching 1.63 percent, the most since February 2009. The implied yield on short-sterling futures contracts for December 2011, which anticipates where short-term interest rates will be, rose five basis points to 1.75 percent as traders added to bets for higher borrowing costs. The Bank of England’s Monetary Policy Committee is scheduled to meet on Feb. 10.
‘Regained Some Ground’
“Sterling regained some ground at the start of the week, and we would expect further recovery as we move closer to the February MPC meeting on Thursday and especially the quarterly inflation report next week,” Valentin Marinov, a senior currency strategist at Citigroup Inc. in London, wrote in a note to clients.
A report this week is forecast to show U.K. manufacturing expanded for an eighth month in December. Output rose 0.4 percent after a 0.6 percent gain in November, the Office for National Statistics will say on Feb. 10, according to a Bloomberg survey.
On the same day, the Bank of England is forecast to keep its bond-purchase plan at 200 billion pounds ($323 billion) and leave benchmark rates at a record low 0.5 percent, according to all 62 economists in a Bloomberg News survey.
Policy Makers Split
Policy makers split last month. Martin Weale joined Andrew Sentance’s push to raise the key rate a quarter point to control prices, while Adam Posen continued a drive he started in October to expand bond purchases to support growth.
The pound strengthened 0.5 percent to 83.94 pence per euro, and 0.2 percent to 132.60 yen. It was little changed at $1.6118.
The Australian dollar advanced against all its major counterparts, excluding the pound, as job advertisements in the nation rose for a ninth month. Jobs advertised in newspapers and on the Internet climbed 2.4 percent in January from December, when they increased a revised 1.2 percent, Australia & New Zealand Banking Group Ltd. said in a report released in Melbourne.
Australia’s currency rose 0.1 percent against the yen to 83.42, from 83.32. It has gained 0.5 percent against the Japanese currency since the beginning of the year as the global recovery takes hold, damping demand for the safe-haven appeal of the yen.
Yen Depreciates
The yen weakened versus the U.S. dollar, Australian dollar and the British pound on signs the global economy is picking up.
“While rates everywhere else are likely to go up, people don’t expect Japanese rates to follow,” Paul Robson, a senior foreign exchange strategist at Royal Bank of Scotland Plc in London, said. “The yen has just been caught out by rate spreads and reviving risk appetite with people looking through some of the weather distortions on payrolls and seeing that as a positive for the global environment.”
Source: Bloomberg By
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