Dollar Holds Retreat as Yellen Lifts Stocks; Crude Drops

March 31:

The dollar held declines versus most of its major peers while futures on indexes in Australia and Hong Kong climbed as Federal Reserve Chair Janet Yellen said the U.S. economy still needs support. Crude oil dropped with China to kick off a swathe of manufacturing data today.

The greenback lost 0.2 percent versus New Zealand’s dollar by 7:36 a.m. in Tokyo and held yesterday’s 0.1 percent retreats versus the euro and the pound. Futures on Australia’s S&P/ASX 200 Index (AS51) and gauges in Hong Kong added at least 0.1 percent with Standard & Poor’s 500 Index futures little changed following a 0.8 percent jump in the benchmark U.S. measure. Platinum rose 0.2 percent as oil in New York fell a second day.

Gauges of Chinese manufacturing today are projected to confirm a picture of slowing growth in Asia’s largest economy. Private data on factory output from India to Vietnam is also due, along with the quarterly Tankan index of sentiment among large manufacturers in Japan, where a sales-tax increase comes into effect today. Australia and India review interest rates. Yellen said in a speech that the U.S. economy will need support for “some time” as there is still slack in the job market.

“Fed policy will remain as record-low levels to sustain the current trajectory are unlikely to change even if data-dependent mantras are impacted to the upside,” Evan Lucas, a markets strategist in Melbourne at IG Ltd., wrote in an e-mail to clients today. China’s manufacturing data “is going to be seen one way, despite an expansion or contraction read. The expectation of stimulus is building.”

Kiwi Gains

The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, lost 0.1 percent in New York after Yellen’s speech, which came after her previous comments ignited speculation U.S. interest rates could be increased as soon as the middle of next year. Aiding declines, the Institute for Supply Management-Chicago Inc.’s business barometer unexpectedly dropped to 55.9 for last month from 59.8 in February. March payrolls data will be released April 4.

New Zealand’s currency, known as the kiwi, strengthened to 86.80 U.S. cents after rising 5.5 percent in the first quarter, the best performance against the dollar of 16 major currencies tracked by Bloomberg.

The Australian dollar was little changed at 92.71 U.S. cents after gaining 0.2 percent to the highest close since Nov. 20 in the last session. The Reserve Bank of Australia is projected to keep its overnight cash rate target at a record-low 2.5 percent today. The central bank in India, where markets are closed a second day for holidays, will probably keep its repurchase rate at 8 percent, according to the median of 39 economists’ estimates collated by Bloomberg.

Tankan Survey

The yen was little changed at 103.26 per dollar after falling a third trading day yesterday, down 0.4 percent. Japan’s currency gained 2 percent in the first quarter as concern over the outlook for China’s economy and Russia’s incursion into Ukraine fueled demand for safe-haven assets.

The Tankan index of business confidence among large manufacturers will probably rise to 19 for the first quarter from 16 in the previous period, according to the median of 23 economists’ estimates compiled by Bloomberg. The Tankan gauge of how the biggest manufacturers view the outlook for business conditions, however, is forecast to drop to 13 from 14 in the last three months of 2013.

Futures on the Nikkei 225 Stock Average rose 0.1 percent to 14,835 on the Chicago Mercantile Exchange, from 14,815 in the previous session. Contracts on the gauge in Osaka lost 0.1 percent to 14,810 by 3 a.m. local time, after the Nikkei 225 closed up 0.9 percent at 14,827.83. Japan’s consumption tax rises to 8 percent from 5 percent today, part of Prime Minister Shinzo Abe’s efforts to rein in the nation’s debt.

Source: http://www.businessweek.com/news/2014-03-31/dollar-holds-retreat-as-yellen-lifts-stocks-crude-drops