The euro advanced versus most of its major counterparts as reports showed New York manufacturing accelerated faster than forecast this month and German investor confidence increased.
The yen fell against all of its 16 major peers as another report showed U.S. retail sales rose 0.3 percent in January, less than forecast. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict developments six months in advance, increased to 15.7, from 15.4 in January, a fourth monthly gain.
“Manufacturing is the one bright spot in the economy,” Richard Franulovich, a senior currency strategist at Westpac Banking Corp. in New York, said of the U.S. reports. “There’s a question mark about whether that’s a clean read on spending because of the storms.”
The euro appreciated 0.3 percent to $1.3532 at 8:57 a.m. in New York, from $1.3489 yesterday. Earlier it rose as much as 0.5 percent to $1.3551. The dollar gained 0.5 percent to 83.73 yen, from 83.32.
The 17-member currency has gained 1.1 percent this year, according to Bloomberg Correlation-Weighted Currency Indexes, a gauge of 10 developed-nation currencies. The yen has dropped 3.6 percent, the Swiss franc has slumped 4.2 percent and the dollar has slipped 0.2 percent.
The euro may fall to a four-week low against the dollar after it slid below support at about $1.3494, according to Okasan Securities Co., citing trading patterns.
Head-and-Shoulders
The $1.3494 level represents a so-called neckline of a head-and-shoulders formed by the “left shoulder” on Jan. 27, the “head” on Feb. 2 and the “right shoulder” on Feb. 9, said Tsutomu Soma, a bond and currency dealer at Okasan in Tokyo.
The breach of the neckline connecting the base of the three peaks signals the reversal of a trend and indicates the euro may drop to $1.3364, a 50 percent Fibonacci retracement of the currency’s rise from its Jan. 10 low, he said.
The Swiss franc weakened against the euro on reduced demand for safety, declining 0.3 percent to 1.3118, from 1.3084 yesterday.
The Federal Reserve Bank of New York’s general economic index rose to 15.4 from 11.9 in January. Economists projected an increase to 15, based on the median forecast in a Bloomberg News survey. Readings greater than zero signal expansion in the so- called Empire State Index, which covers New York, northern New Jersey, and southern Connecticut.
Treasury Yields
Two-year Treasury note yields reached 0.88 percent, the highest level in more than eight months, before trading little changed at 0.85 percent. The comparable Japanese bond yield was 0.24 percent. The spread was 0.61 percentage point, almost the widest since June.
“Strong data today, and the market is expecting some strong data, will push dollar-yen even higher,” said Ian Stannard, a senior currency strategist at BNP Paribas SA in London. U.S. two-year note “yields have been moving quite sharply higher, and that’s the reason why we’re seeing dollar- yen moving higher,” Stannard said.
Australia’s dollar advanced 0.2 percent to 83.73 yen after earlier touching 83.90 yen, the strongest level since May 13.
The Reserve Bank of Australia said in minutes of its Feb. 1 meeting that a “slightly restrictive” policy stance was appropriate as a resources boom boosts incomes.
The pound strengthened against the dollar and euro for a second day and short-sterling futures fell after U.K. consumer prices rose to the highest since November 2008.
The implied yield on the short-sterling futures contract expiring in December increased 0.04 percentage point to 1.75 percent as traders increased bets that the Bank of England will boost interest rates.
Sterling appreciated 0.8 percent to $1.6161. Against the euro, the pound added 0.4 percent to 83.79 pence.
Source: Bloomberg By
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