Dollar Strengthens Before GDP Data; European Stocks Gain


The dollar strengthened before a report that will probably confirm the U.S. economy rebounded in the third quarter, while European stocks rose, heading for their best week since April. Chinese shares posted their longest slump since 1994 as money rates surged.

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The U.S. currency rose 0.2 percent to 104.42 yen at 11:30 a.m. in London and touched a five-year high. It climbed to a record versus Turkey’s lira. The Stoxx Europe 600 Index added 0.2 percent, extending its gain this week to 3.4 percent. Standard & Poor’s 500 Index (SPA) futures rose 0.2 percent. The Shanghai Composite Index retreated for a ninth day. Gold climbed from the lowest close in more than three years.

A report today will probably confirm that U.S. gross domestic product expanded at a 3.6 percent pace in the three months through September, two days after the Federal Reserve decided to slow its bond-buying program. China’s seven-day repurchase rate jumped to the highest since June’s record cash crunch even as the central bank said it had recently conducted short-term liquidity operations. The Bank of Japan agreed to continue buying the country’s sovereign debt at the same rate, following the conclusion of a meeting of policy makers.

Photographer: Goh Seng Chong/Bloomberg

A pedestrian walks past images of different currencies on display at a money changer in… Read More

“What you’ve got to recognize is that the justification for tapering is the assumption that the macro economic fundamentals in the U.S. are improving,” Jeremy Stretch, head of currency strategy at Canadian Imperial Bank of Commerce, said by phone from London. “Dollar-yen looks like it’s still got a bit further to go.”

Strengthening Dollar

The dollar advanced against 12 of its 16 major counterparts. The U.S. currency climbed as high as 104.59 yen, its strongest level since October 2008, and headed for an eighth consecutive weekly advance. The euro strengthened 0.2 percent to 142.67 yen.

European equities have climbed 2.8 percent over the last three days, their biggest rally since June. Carmakers and travel companies led the Stoxx 600 higher today. BG Group Plc retreated 2 percent, the largest drag on the equity benchmark, after its partner in a Brazilian project estimated recoverable volumes for an oilfield. BAE Systems Plc dropped 4.8 percent after the arms manufacturer said that the United Arab Emirates has stopped talks to buy Typhoon fighter jets.

Treasury 30-year bonds rose, pushing yields three basis points lower to 3.88 percent. Ten-year securities were little changed, with the yield at 2.93 percent.

Developing Markets

The MSCI Emerging-Market Index fell 0.3 percent. The Shanghai Composite Index slumped for a ninth day, its longest streak of losses since 1994. The South African rand dropped for a fourth-consecutive day as S&P maintained a negative outlook on the nation’s credit rating.

The Turkish lira fell to a record against the dollar and the euro as the government dismissed more police chiefs investigating corruption in the Prime Minister’s political circle. It dropped as much as 1.1 percent to 2.0947 per dollar and 0.8 percent to 2.8559 per euro.

Gold rose 0.1 percent to $1,194.40 an ounce on Comex in New York after falling yesterday to the lowest close since August 2010. Futures are heading for a 29 percent decline this year, the most since 1981. Zinc advanced 1.7 percent and nickel added 1.3 percent today.

The cost of insuring against losses on corporate bonds declined for a sixth day, approaching the lowest in almost four years. The Markit iTraxx Europe Index of credit-default swaps on 125 investment-grade companies dropped one basis point to 72 basis points, the least since January 2010.

The Markit iTraxx Crossover Index of contracts on 50 junk-rated European companies fell three basis points to 291, the lowest since October 2007.

Babatunde Akinsola
Babatunde Akinsola
Babatunde Akinsola is aNaija247news' Southwest editor. He's based in Lagos and writes on the Yoruba Nation political issues, news and investigative reports

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