Friday, Sep 10, 2010
By Bradley Davis
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--The U.S. dollar fell against commodity-backed currencies such as the Australian and New Zealand dollars Friday as positive Chinese economic data fueled bets on currencies closely tied to the pace of global growth.
A narrowing in China's trade surplus, with a stronger-than-expected increase in imports, boosted investor confidence that Chinese demand is holding up even as China has made moves to put a brake on its growth.
The Chinese data continue a rally sparked Thursday on the heels of better-than-expected economic data in the U.S. and Australia, allaying some concerns that a global recovery could be slowing.
But even as growth-oriented currencies rose, they gained modestly, with investors likely exercising some caution ahead of a weekend full of possible market-moving events, including the release of additional key Chinese data, said Dan Cook, senior market analyst at IG Markets in Chicago.
International banking regulators also meet this weekend in Basel, Switzerland, as concern builds over the health of the European banking sector. The euro joined the ride of riskier currencies moving higher, but its gains are likely to be capped by caution ahead of the meetings, analysts said.
Friday afternoon, the euro was at $1.2726 from $1.2703 late Thursday, according to EBS via CQG. The dollar was at Y84.19 from Y83.83, while the euro was at Y107.11 from Y106.49. The U.K. pound was at $1.5358 from $1.5438. The dollar was at CHF1.0192 from CHF1.1052.
The ICE Dollar Index, which tracks the U.S. currency against a trade-weighted basket of others, was at 82.670 from 82.649.
"I wouldn't say there's kind of rampant mood of 'risk-on' sentiment in the market," said Steven Barrow, head of G10 strategy at Standard Bank in London. "It's actually focused a little more on those commodity-type currencies," such as the Australian and New Zealand dollars, he said.
The commodity-linked Canadian dollar gave back its earlier gains spurred by better-than-expected August jobs figures after Bank of Canada Gov. Mark Carney threw some cold water on expectations for future rises in key Canadian rates.
He said future rate increases by Canada's central bank would be "carefully considered in light of the unusual uncertainty surrounding the outlook," repeating language from a statement following the bank's third consecutive interest rate hike two days ago.
The Bank of Canada remains the only central bank in the Group of Seven leading industrial nations to raise interest rates since the economic downturn.
The U.S. dollar had dipped to a low at C$1.0288, its lowest level since Aug. 19, according to EBS via CQG, after positive Canadian jobs figures were released Friday morning, but rebounded to gain about 0.2% on the Canadian dollar in the wake of Carney's comments.
Separately, China's yuan jumped to a one-month high against the U.S. dollar intraday after the People's Bank of China surprised the market by setting the dollar-yuan central parity rate at a record low.
The fixing came despite a modest rise in the U.S. Dollar Index overnight, leading traders to speculate that Beijing may be responding to both international pressure over the yuan's exchange rate and concerns about inflationary pressure at home.
The dollar gained against the yen on a day when Japanese Prime Minister Naoto Kan called on other nations not to interfere with Japan's possible effort to lower the yen, should Tokyo decided to intervene in the market.
Japan has been increasing the prospect of intervention in the currency markets amid loud calls from businesses to act on the surging yen, which is sitting near 15-year highs against the dollar.
-By Bradley Davis, Dow Jones Newswires; 212-416-2654; bradley.davis@dowjones.com
(Don Curren in Toronto and Andrew Batson and Liu Li in Beijing contributed to this article.)
(END) Dow Jones Newswires
September 10, 2010 14:02 ET (18:02 GMT)
