2013.09.2706:37:21UTC+00U.S. Dollar on track for weekly advance before consumer data, Fed speakers

A gauge of the dollar was on track for its first five-day advance in four weeks before data estimate to display spending in the U.S. improved, indications of strength that may trigger an easing in financial stimulus.

The U.S. currency is set to increase this week versus the euro after Federal Reserve Bank of Kansas City President Esther George said labor-market surges warrant tapering the U.S. central bank’s bond purchases immediately. Fellow voting members on the policy committee, William C. Dudley and Charles Evans are also scheduled to speak today, as is European Central Bank President Mario Draghi.

Consumer Sentiment

U.S. consumer purchases increased 0.3 percent in August after a 0.1 percent advance in July, according to the median forecast in a Bloomberg News survey of economists before today’s report. The data will also show personal income rose 0.4 percent in August, the biggest gain since February, after a 0.1 percent gain a month earlier, according to the poll.

Fed Taper

The Federal Open Market Committee last week unexpectedly refrained from dialing back its $85 billion in monthly bond purchases, saying it was waiting for more signs of sustained economic improvement. Most economists surveyed by Bloomberg on Sept. 18-19, after the FOMC meeting, expect the Fed to wait until a gathering in December to taper purchases.

New York Fed President Dudley said on Sept. 23 that the central bank must “forcefully” push against headwinds in an economy that “still needs the support of a very accommodative monetary policy.”

The yen has advanced 0.7 percent in the past week, the best performance among 10 developed nation currencies tracked by Bloomberg Correlation Weighted Indexes. The dollar climbed 0.3 percent while the euro was little changed.

The U.S. Senate plans to vote today on a spending bill, three days before federal spending authority runs out and a few weeks until the country hits its borrowing limit.

“In the very short term, if we do get a bit more uncertainty coming out of the fiscal situation in the U.S., we do think the yen will strengthen across the board,” CBA’s Dragicevich said.

Japan’s currency tends to strengthen during periods of financial and economic turmoil because Japan isn’t reliant on foreign capital to fund its deficits.