Dollar index drops in longest stretch of losses since March
The Dollar Index fell for a sixth day in its longest losing streak since March as global economic prospects encouraged investors to sell the greenback and buy higher-yielding assets outside the U.S.
Sterling rose to a one-month high versus the dollar as U.K. producer prices increased in August for a sixth month, indicating the Bank of England may succeed in arresting deflation. The yen advanced versus all of its major counterparts on speculation China's recovery will boost the growth of its Asian neighbors and Japan's exporters will repatriate earnings.
"The data has been relatively good, and the burden of proof is on the doomsayers," said Paul Robson, a senior currency strategist in London at Royal Bank of Scotland Group Plc, Britain's biggest state-owned bank. "With policy makers saying they are going to keep monetary policy low and accommodative for some time, that's supporting risk, and people are using the dollar as a funding currency."
The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners including the euro, yen and pound, retreated 0.2 percent to 76.679 at 9:01 a.m. in New York. The gauge decreased 1.9 percent from Sept. 4 in its biggest weekly drop since May. The gauge earlier today touched 76.511, the weakest level since Sept. 25, 2008.
Confidence among U.S. consumers probably gained in September for the first time in three months as the pace of job losses slowed and the economy showed signs of pulling out of the recession.
The Reuters/University of Michigan preliminary index of consumer sentiment increased to 67.5 this month from 65.7 in August, according to the median estimate of 69 economists surveyed by Bloomberg News. The report is due at 10 a.m. New York time.
The dollar declined 0.1 percent today to $1.4592 per euro, from $1.4582 yesterday, after earlier dropping to $1.4627, the weakest level since Dec. 18. The U.S. currency fell 0.9 percent to 90.83 yen after touching 90.68, the lowest level since Feb. 13. The yen gained 0.8 percent to 132.72 per euro, from 133.76.
The U.S. currency was headed for its biggest weekly decline since May versus the euro, falling 2.1 percent. It was poised for a 2.3 percent drop versus the yen this week, its fifth weekly decline in the longest losing streak since December. The yen was up 0.2 percent versus the euro this week.
Sterling increased as much as 0.6 percent to $1.6742, the highest level since Aug. 9, as the Office for National Statistics said today in London said the U.K.'s producer prices climbed 0.2 percent last month from July, when it rose at the same pace. The Bank of England refrained yesterday from expanding its asset-purchase program of buying up to 175 billion pounds ($290 billion) bonds.
The yen advanced to a seven-month high versus the dollar on advances in China's output and on speculation Japanese companies are bringing back money earned abroad to take advantage of a tax break that went into effect this fiscal year.
"Japan's exporters are bringing home their earnings, a typical move in September toward the end of the third quarter," said Takashi Kudo, director of foreign-exchange sales at NTT SmartTrade Inc., a unit of Nippon Telegraph & Telephone Corp. "As a result, the yen is rising across the board."
The Japanese government announced this year that it would waive taxes on repatriated profits from April 1 to help support the economy. Under previous laws, companies had to pay a combined 40 percent tax on overseas earnings.
China's industrial production expanded 12.3 percent in August from a year earlier, the statistics bureau reported today in Beijing. Economists surveyed by Bloomberg News forecast an 11.8 increase.
The euro advanced after Rome-based Istat said Italian industrial production rose in July more than economists forecast. German exports, adjusted for working days and seasonal changes, rose 2.3 percent in July from June, the Federal Statistics Office said in Wiesbaden on Sept. 8.