The dollar strengthened toward a five-year high against the yen while Treasuries and gold fell before the release of Federal Reserve minutes. European stocks fluctuated between gains and losses and natural gas climbed.
The dollar appreciated 0.3 percent to 104.96 yen at 10:05 a.m. in London after reaching a five-year high of 105.44 on Jan. 2. The yield on 10-year Treasury notes rose two basis points to 2.96 percent. The Stoxx Europe 600 Index slipped 0.1 percent and Standard & Poor’s 500 Index futures were little changed. Gold dropped 0.7 percent, silver declined 2 percent and U.S. natural gas advanced 1.2 percent.
Minutes of the Fed’s last meeting will probably provide details about plans to cut bond buying from this month. A private report due today on hiring by companies in December will give clues about the strength of the U.S. economy before the monthly payrolls data later this week. The International Monetary Fund plans to increase its forecast for world growth, Managing Director Christine Lagarde said yesterday.
“The Fed is going to continue to push the message of moderate tapering, but I think they will provide a very bullish outlook for the economy,” said Ian Stannard, head of European foreign-exchange strategy at Morgan Stanley in London. “We are looking for the dollar to continue to gain broad-based support.”
The dollar was little changed at $1.3608 per euro after appreciating to $1.3572 on Jan. 6, the strongest since Dec. 5. The yen dropped 0.4 percent to 142.94 per euro.
As the Fed begins to slow the pace of economic stimulus measures that tend to debase currencies, the Bank of Japan is persevering with its plan to buy more than 7 trillion yen ($67 billion) of government bonds a month to boost inflation, weakening the yen.
Treasuries Auction
Treasuries fell for the first time in three days before a $21 billion 10-year auction today. The three-year rate rose to the highest in almost four months after the $30 billion auction yesterday attracted the least demand since October.
Banco Mare Nostrum SA and Australia & New Zealand Banking Group are among lenders selling covered bonds in Europe today as borrowing costs for secured debt decline. The Spanish savings bank is issuing 500 million euros ($680 million) of five-year notes, joining Portuguese lender Caixa Geral de Depositos SA and La Banque Postale in marketing securities backed by mortgages or public sector loans. The average yield on covered bonds fell six basis points in the past week to 1.52 percent, the lowest since December 19, according to Bloomberg bond index data.
SAP Climbs
A gauge of banks in the Stoxx 600 climbed 1.2 percent, the biggest increase among 19 industry groups. Trading volumes in the Stoxx 600 were more than double the average in the past 30 days, according to data compiled by Bloomberg.
SAP AG, the world’s biggest enterprise-software company, added 1.1 percent after UBS AG recommended investors buy the shares.
Kion Group AG slid 2.8 percent after its biggest shareholder put a 10.8 percent stake in the forklift maker on sale. SCOR SE lost 3.7 percent after Les Echos reported the French reinsurer may take control of Mutre Reinsurer, which is owned by Scor, Matmut and a group of 14 shareholders connected to La Mutualite Francaise.
Apollo Education Group Inc., the biggest U.S. for-profit college, and Micron Technology Inc., the largest U.S. maker of memory chips, rallied after the market close following better-than-estimated quarterly earnings.
Ford’s Mulally
Ford Motor Co. rose and Microsoft Corp. fell after Ford Chief Executive Officer Alan Mulally said he will stay with the automaker through 2014 and won’t leave for Microsoft.
The S&P 500 rose 0.6 percent yesterday, snapping a three-day drop. A report from the ADP Research Institute at 8:15 a.m. New York time will probably show that U.S. companies added 200,000 workers in December, economists surveyed by Bloomberg predicted. They hired a net 215,000 in November, the most in a year. The Labor Department publishes the unemployment rate and hiring figures for last month on Friday.
The Fed said after its last meeting that it would reduce monthly bond purchases by $10 billion to $75 billion from January. The program has swelled the Fed’s balance sheet to more than $4 trillion.
The MSCI Emerging Markets Index rose for the first time in six days, adding 0.4 percent. Indian stocks rallied from a three-week low and benchmark gauges in the Czech Republic, Indonesia and the Philippines advanced at least 0.6 percent.
China IPOs
The Hang Seng China Enterprises Index of mainland shares traded in Hong Kong climbed 0.9 percent, rebounding from a more than two-month low. The Shanghai Composite Index slipped 0.2 percent on concern the resumption of initial public offerings will divert funds. The China Securities Regulatory Commission approved seven IPOs yesterday, bringing the total number of those approved to 38.
Gold declined to $1,223.75 an ounce, the second consecutive drop, and silver fell to $19.486 an ounce. U.S. natural gas climbed almost 3 percent this year on demand for heating fuel as the U.S. endures some of the coldest weather on record. The S&P GSCI gauge of 24 commodities dropped 0.3 percent, extending the decline this month to 3 percent, the worst start to a year since 2007.
