The dollar was poised for its largest weekly surge in four months against the yen before the dissemination of U.S. payrolls data, with Federal Reserve leaders reiterating the threshold for altering its stimulus tapering is high.
The U.S. currency yesterday reached its best point against the yen since January as reports showed fewer Americans filed claims for unemployment benefits. The euro marching toward for a fifth weekly increase as European Central Bank President Mario Draghi damped speculation of further financial easing. Australia’s dollar held near its peak mark in almost three months as central bank Governor Glenn Stevens spoke before a parliamentary panel today.
“There’s a bit more optimism about payrolls after the drop in jobless claims,” said Yuki Sakasai, a currency strategist in New York at Barclays Plc. “Whether dollar-yen continues this week’s climb will depend on the extent of the surprise in the data. With the weather providing an excuse for a bad result, markets are more likely to react to a positive number.”
The dollar exchanged with a little move at 103.02 yen as of 10:48 a.m. in Tokyo and has spiked up 1.2 percent this week, the largest increase since the period ended November 1. It exchanged at $1.3860 per euro from $1.3861, set for a 0.4 percent pullback since February 28. The shared currency fetched 142.78 yen from 142.86 and was marching toward for a 1.6 percent weekly increase, the largest since the five days to November 15.
U.S. Employment
The U.S. probably bolstered 149,000 jobs in February, after a 113,000 hike a month earlier, according to the median estimate in a Bloomberg News survey of economists taken before the Labor Department report today. Payroll hikes averaged almost 200,000 a month in 2013.
Unemployment claims decreased by 26,000 to 323,000 in the week ended March 1, the least since the end of November and fewer than the weakest projection in a Bloomberg poll, data showed yesterday.
“A weaker number is at least half-expected, weather-related -- and not all recent labor data has been soft,” National Australia Bank Ltd. analysts led by Peter Jolly wrote in a research note, referring to the payrolls report. “A stronger than consensus would be a real surprise, and solidify expectations tapering will continue,” supporting the dollar, they said.
Fed policy makers are attempting to know whether recent economic weakness stems from harsh weather or basic problems to development. At a March 18-19 meeting of the Federal Open Market Committee they’ll weigh whether to proceed with another $10 billion cut to their bond purchases, which would trim down the monthly pace to $55 billion.
Taper Path
New York Fed President William Dudley said at an event in New York yesterday organized by the Wall Street Journal that while harsh weather will hurt growth during the first quarter, it doesn’t prompt “a fundamental change in the outlook,” and “does not rise to the level where you change the taper path.”
Atlanta Fed President Dennis Lockhart stated in the text of a speech in Washington yesterday there is “a high bar to reversing course,” unless the U.S. economy “takes a major turn for the worse or a spell of intense disinflation develops.”
Philadelphia Fed President Charles Plosser suggested tapering needs to be accelerated. “Reducing the pace of asset purchases in measured steps is moving in the right direction, but the pace may leave us well behind the curve if the economy continues to play out according to the FOMC forecasts,” he said yesterday in London.
ECB Policy
The ECB left its standard interest rate at 0.25 percent at a meeting in Frankfurt yesterday as projection by 40 out of 54 economists surveyed by Bloomberg News. The other 14 were making a forecast that there will be a rate cut.
Euro-area inflation, which was at 0.8 percent in February, will advance to 1.7 percent in the fourth quarter of 2016, according to ECB projections. Consumer prices are assumed to increase 1 percent this year. ECB officials see inflation at 1.3 percent in 2015 and an average rate of 1.5 percent in 2016, he said.
Australia’s dollar exchanged at 90.88 U.S. cents from 90.90 after bolstering as high as 91.13 yesterday, the best performing mark since December 11. It has jumped 1.8 percent this week as data showed economic development and retail sales hikes more than analysts projected and the trade surplus widened to the most in 2 1/2 years.
The currency is trading at levels that are high by historical standards, the Reserve Bank’s Stevens said. An Australian dollar at 90 U.S. cents is higher than the RBA’s assessment, he said.
