Dollar Climbs Most in 4 Months Before Fed on Jobs Market
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A gauge of the dollar advanced the most in four months as reports showed signs of improvement in the U.S. labor market before the Federal Reserve meets debate the pace of interest-rate increases.
The U.S. currency climbed to an eight-month high versus the euro this week as jobless claims tumbled to the lowest in eight years before of nonfarm payrolls data on Aug. 1. New Zealand’s dollar fell the most since January after the central bank said it would pause rate increases. Russia’s ruble gave back gains amid Ukraine turmoil even after the central bank unexpectedly raised borrowing costs yesterday. The Fed meets July 29-30.
“There’s broad dollar strength, but the question is whether the U.S. economy will strengthen sufficiently to put rates up,” Andrew Wilkinson, chief market analyst at Interactive Brokers LLC, said in a phone interview from Greenwich, Connecticut. “There’s some kind of sea change happening to the euro. It has finally cracked lower.”Story: Yellen's Philosophy: The More Jobs Data, the Better
The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major counterparts, added 0.5 percent this week in New York, the most since the period ending March 21, and touched 1,014.39, the highest since June 18.
The U.S. currency rose 0.7 percent to $1.3430 per euro, the largest weekly gain since June 13, and touched $1.3422, the strongest since Nov. 21. The greenback climbed for a second week against the yen, advancing 0.5 percent to 101.84. The euro slid 0.2 percent to 136.77 yen.
Kiwi Slumps
The Turkish lira was the biggest gainer of the dollar’s 31 major peers this week, adding 1.4 percent. South Africa’s rand was the second-best performer, rising 1.3 percent, followed by the Columbian peso, which climbed 1 percent.
New Zealand’s kiwi, named for the image of the flightless bird on its NZ$1 coin, lost the most, sliding 1.5 percent and touching a six-week low of 85.39 U.S. cents.
The currency slipped as Reserve Bank of New Zealand Governor Graeme Wheeler said its level is “unjustified and unsustainable.” He indicated they would hold steady after boosting the key interest rate for the fourth time this year to 3.5 percent. That compares with zero to 0.25 percent in the U.S., 0.15 percent in the euro zone and 0.1 percent in Japan.
Russia’s ruble sank for a second day yesterday after its central bank upped the one-week auction rate to 8 percent from 7.5 percent. The move took analysts by surprise with none of the 23 economists surveyed by Bloomberg forecasting an increase.
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