Dollar Gauge at Five-Year High as Kiwi, Aussie Decline on China 

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A gauge of the dollar headed for its highest close in more than five years after China said imports unexpectedly fell in November, underpinning demand for the currency of the U.S. where growth is beating forecasts.

The dollar rose to the strongest in more than seven years versus the yen before reports this week forecast to show U.S. consumer confidence and retail sales both improved. The New Zealand and Australian dollars slid to the weakest levels in at least two years after the data from China, the two nations’ largest trading partner. Malaysia’s ringgit and Indonesia’s rupiah fell as they resumed trading after closing on Dec. 5 before the U.S. released its monthly payroll data.

“China exports (CNFREXPY) and imports both disappointed, but the latter disappointed more, and I think what that does is it’s going to feed fears of a deeper slowdown,” said Todd Elmer, a strategist at Citigroup Inc. in Singapore. “Policy divergence between the Federal Reserve and other major central banks has been one of the major drivers of dollar appreciation.”

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 trading partners, climbed less than 0.1 percent to 1,122.80 at 1:57 p.m. in Tokyo, set for the highest close since March 2009.

The dollar rose 0.1 percent to 121.52 yen after appreciating to 121.85, the highest level since July 2007. The U.S. currency was little changed at $1.2287 per euro after gaining 1.4 percent last week. The yen weakened 0.1 percent to 149.30 per euro.

China Imports

China’s imports fell 6.7 percent, the customs administration said today, compared with the median estimate among economists surveyed by Bloomberg News for a gain of 3.8 percent increase. Exports rose 4.7 percent from a year earlier, less than the forecast for growth of 8 percent.

New Zealand’s dollar slipped 0.9 percent to 76.45 U.S. cents after declining to 76.43 cents, the least since June 2012, and Australia’s dropped 0.5 percent to 82.78 cents after weakening to 82.76 cents, the lowest since July 2010.

The kiwi also weakened for a second day before the Reserve Bank of New Zealand meets to review interest rates on Dec. 11.

“The New Zealand dollar is high beta to the U.S. dollar, so if the U.S. dollar rallies, the New Zealand dollar will be sold aggressively,” said Imre Speizer, a markets strategist at Westpac Banking Corp. in Auckland. “Also, we have the RBNZ this week, which will have a dovish shift from the previous forecasts in September.”

Dollar’s Advance

The U.S. dollar has jumped 12 percent in the past six months, the best performer of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen slumped 7.6 percent and the euro fell 0.6 percent.

U.S. companies added 321,000 jobs in November, the Labor Department said last week, exceeding the most optimistic projection in a Bloomberg survey. Economists predict a Commerce Department report on Dec. 11 will show retail sales climbed 0.4 percent in November, while data the following day will show the Thomson Reuters/University of Michigan consumer confidence index increased to 89.7 this month, the most since July 2007.

“We expect to see the dollar strengthen,” Ed Rogers, chief executive of Rogers Investment Advisors in Tokyo, said today in an interview with Yvonne Man on Bloomberg Television. “Dollar-yen, we’re predicting 120-135 as the range for 2015.”

The ringgit fell for a fourth day as brent crude extended its decline from the lowest in almost five years, reinforcing concern revenue will decline for Malaysia, a net oil exporter.

“The dollar strengthened across the board following the stronger-than-expected payrolls,” said Khoon Goh, a strategist at Australia & New Zealand Banking Group Ltd. in Singapore. “In addition, oil prices remain under downward pressure, which is also weighing on the ringgit.”

The ringgit slid 0.9 percent to 3.5040 per dollar, the rupiah weakened 0.5 percent to 12,355 and the South Korean won dropped 0.4 percent to 1,117.95.

 

Source: Bloomberg – Dollar Gauge at Five-Year High as Kiwi, Aussie Decline on China

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