The euro climbed the most versus the dollar in six weeks as the European Central Bank said it may raise interest rates next month, while Federal Reserve officials signaled the U.S. economy still needs stimulus.
The Swiss franc rose to a record against the U.S. currency as turmoil pushed oil to a 29-month high. The greenback fell versus most major peers on speculation a payrolls gain wasn’t enough to spur the Fed to raise rates soon. Fed Chairman Ben S. Bernanke wouldn’t rule out more Treasury buys to support growth. U.S. retail sales rose last month, data next week may show.
“The takeaway from a very busy week is still a clear tightening signal from the ECB, relatively dovish comments from Bernanke and a U.S. jobs report that’s positive, but not positive enough to alter U.S. rate expectations,” said Vassili Serebriakov, a currency strategist at Wells Fargo & Co. in New York. “There’s scope for some further near-term dollar weakness or euro strength.”
The euro climbed 1.7 percent to $1.3987, the most since the five days ended Jan. 21, from $1.3754 on Feb. 25. It added 2.5 percent to 115.13 yen, from 112.35. The dollar appreciated 0.8 percent to 82.32 yen, from 81.68.
The franc advanced 0.4 percent to 92.45 centimes per dollar and touched a record 92.02 centimes on March 2. It tends to gain during periods of financial stress because Switzerland’s export- reliant economy doesn’t need foreign capital to balance the current account, the broadest measure of trade.
Rate Outlook
The euro gained versus 15 of its 16 most-traded counterparts on March 3 after ECB President Jean-Claude Trichet said an “increase of interest rates in the next meeting is possible” to counter inflation. He spoke in Frankfurt after the ECB left its key rate at 1 percent, where it’s been since May 2009.
The Fed has held its benchmark at zero to 0.25 percent since December 2008, and won’t increase it until the first quarter of 2012, according to the weighted average in a Bloomberg survey of 74 economists.
“Trichet’s comments were a game-changer,” said Carl Forcheski, a director on the corporate currency sales desk at Societe Generale SA in New York. “The U.S. has 407,000 jobs created over the last three months -- that’s good, but I’m not popping the champagne bottle.”
Employers in the U.S. added 192,000 positions in February, the most since May, after a revised gain of 63,000 in January, Labor Department data showed yesterday. The median forecast in a Bloomberg News survey was for 196,000. The unemployment rate unexpectedly fell to 8.9 percent, the lowest since April 2009.
ECB ‘Out Front’
“The unemployment number was by no means a blowout number that’s going to make the Fed consider tightening anytime soon,” said Boris Schlossberg, director of research at online currency trader GFT Forex in New York. “That leaves the ECB way out front in terms of interest-rate differential.”
Bernanke, in two days of semiannual monetary-policy testimony to congressional committees this week, said rising commodities won’t derail the recovery. He reiterated that while U.S. economic growth will accelerate, he still wants to see a “sustained period of stronger job creation.”
The Fed chief also signaled he’ll keep the central bank on course to finish buying $600 billion of Treasuries through June to spur growth, and didn’t rule out another round of purchases.
U.S. retail sales increased 1 percent in February, from 0.03 percent the previous month, according to the median forecast of 63 economists in a Bloomberg survey before the Commerce Department reports the data March 11.
Bets on Euro
Futures traders increased bets to the most since January 2008 that the euro will gain versus the dollar, figures from the Washington-based Commodity Futures Trading Commission showed.
The difference in the number of wagers by hedge funds and other large speculators on an advance in the euro compared with those on a drop -- so-called net longs -- was 51,308 on the week ended March 1, the most since Jan. 11, 2008.
Crude oil for April delivery rose as much as 7.5 percent this week to $105.17 a barrel in New York, the highest level since September 2008, on concern supply will be disrupted.
Libyan rebels seeking to end Muammar Qaddafi’s 41-year rule clashed yesterday with security forces loyal to him after repelling government attempts to retake oil hubs in the east. The conflict has left 6,000 people dead, compared with a 1,000 estimate cited by the United Nations, the opposition forces’ spokesman, Abdullah Al Mahdi, told Al Jazeera yesterday.
New Zealand’s dollar reached the weakest in 18 years versus its Australian counterpart on speculation its central bank will cut borrowing costs after the second earthquake in six months.
IMF Forecast
The currency, nicknamed the kiwi, fell versus all of its 16 most-traded peers this week after the International Monetary Fund said it will “likely” cut its New Zealand growth forecast from the current 3 percent after the earthquakes. IMF spokeswoman Caroline Atkinson spoke at a news conference in Washington this week.
The kiwi touched NZ$1.3769 per Australian dollar yesterday, the weakest level since June 1992. It tumbled 1.4 percent on the week to NZ$1.3735, and fell 1.8 percent to 73.83 U.S. cents.
The Reserve Bank of New Zealand will reduce its benchmark rate by 0.15 basis points over the next 12 months, compared with a prediction for an increase of 54 basis points a month ago, according to a Credit Suisse Group AG index.
The two quakes may have caused as much as NZ$20 billion ($15 billion) of damage, according to Prime Minister John Key.
To contact the reporters on this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net; Allison Bennett in New York at abennett23@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
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