TOKYO, Aug 6 — The dollar remained lower following a decline at the end of last week after Chinese data signalled a slowdown in the world’s second-largest economy is moderating, sapping demand for the greenback as a haven asset.
The dollar was within 0.5 per cent of a six-week low against the euro after a US government report on August 2 showed employers added fewer-than-estimated workers in July, damping speculation the Federal Reserve will slow the pace of bond purchases anytime soon. New Zealand’s dollar tumbled against all of its major peers after China halted imports of milk powder from Fonterra Cooperative Group Ltd.
“You would have thought the US dollar will come off a little bit,” said Tim Kelleher, the head of institutional foreign-exchange sales in Auckland at ASB Institutional. “The jobs number was a little bit disappointing for the hawks.”
The Bloomberg US Dollar Index, which tracks the greenback against its 10 major counterparts, rose to 1,029.53 at 11:30am in Tokyo from 1,028.74 on August 2, when it slid 0.6 per cent. The US currency was unchanged at US$1.3276 per euro. It touched US$1.3345 on July 31, the weakest since June 19.
The yen was little changed at 98.92 per dollar and at 131.30 per euro. Australia was on a bank holiday today.
The non-manufacturing Purchasing Managers’ Index rose to 54.1 last month from 53.9 in June, the Beijing-based National Bureau of Statistics and China Federation of Logistics and Purchasing said on August 3. A separate report from HSBC Holdings Plc and Markit Economics said today that their services PMI was unchanged in July at 51.3. A reading above 50 signals expansion.
In the US, Labour Department figures showed on August 2 that payrolls rose by 162,000 in July, the smallest gain in four months and compared with the 185,000 increase projected in a Bloomberg News survey of economists. The unemployment rate dropped to 7.4 per cent from 7.6 per cent.
Fed Chairman Ben S. Bernanke said June 19 after the central bank’s policy meeting that the Fed may start dialling back its bond-buying programme this year and end it entirely in mid-2014 if the economy achieves sustainable growth. It has been buying US$40 billion of mortgage bonds and US$45 billion of Treasuries to inject cash into the economy.
The central bank plans to hold its target interest rate near zero at least as long as unemployment remains above 6.5 per cent and the outlook for inflation doesn’t exceed 2.5 per cent.
The dollar has strengthened 5.8 per cent in the past six months, the best performer among the 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. A government report showed last week that the world’s largest economy expanded 1.7 per cent in the second quarter, surpassing the 1 per cent growth estimated by economists.
Fifty per cent of the 54 economists in a July 18-22 Bloomberg survey expected the Fed to decide to reduce the bond purchases at its September 17-18 gathering.
“I generally like the US dollar,” Greg Gibbs, a Singapore-based senior currency strategist at Royal Bank of Scotland Group Plc, said in an interview with Bloomberg Television. The economic data still point “toward the Fed beginning their tapering in September, so I think that’s going to keep the dollar pretty well supported.”
The kiwi slid 1.2 per cent to 77.41 US cents, nearing the one-year low of 76.84 touched June 24.
Auckland-based Fonterra, the world’s largest dairy exporter, said August 3 that three batches of a whey protein made at a New Zealand plant last year may contain bacteria that can cause botulism. Dairy products make up about a quarter of the South Pacific nation’s total overseas sales, which in turn account for about a third of economic output. Fonterra collects 89 per cent of the milk produced in the country. – THEMALAYMAILONLINE
Kiwi declines: Dollar remains lower amid signs China stabili