Dollar Extends Post-Jobs Retreat

06:00PM Nov 10, 2014
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The dollar fell for a second day after U.S. October non-farm payrolls growth was weaker than economists forecast and traders reduced bets for an early Federal Reserve interest-rate increase.

Power Hour Noon LogoThe greenback weakened versus the ruble for a second day on speculation Russia will intervene in foreign-exchange markets after President Vladimir Putin joined officials in saying the currency’s declines were overdone. China’s yuan and the Australian and New Zealand dollars gained after data showed exports rose more than expected in the world’s second-largest economy. The Swiss franc appreciated to the strongest level against the euro since September 2012.

“We have very stretched positioning in the market,” said Lutz Karpowitz, a senior currency strategist at Commerzbank AG in Frankfurt. “Speculative traders are in U.S. dollar-long positions so it’s possible to see some sort of correction.” A long position is an investment that makes a profit when an asset’s price rises.

The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, slid 0.2 percent to 1,088.81 at 7:05 a.m. New York time after dropping 0.6 percent on Nov. 7, the steepest decline since Oct. 15.

The dollar fell 0.4 percent to 114.20 yen after touching 115.59 on Nov. 7, the highest level since November 2007. It weakened 0.2 percent to $1.2485 versus the euro. The 18-nation currency was little changed at 142.61 yen.

Dollar Forecasts

National Australia Bank Ltd. raised its quarterly forecasts for the dollar against major currencies, analysts, including Ray Attrill, the global co-head of currency strategy in Sydney, wrote in a report today. The revisions include a cut in its year-end target for the euro to $1.22 from $1.26 previously, and an increase in the dollar projection against the Japanese currency to 123 yen from 117 yen at the end of 2015, according to the report.

“Relative economic growth and monetary policy divergence argue strongly for further U.S. dollar appreciation,” the strategists wrote.

The implied yield on 30-day fed fund futures contracts expiring in December 2015 was 0.52 percent, the first month that prices in a quarter-point increase. Before the employment report, investors were betting on an increase in November 2015.

U.S. employers added 214,000 jobs in October, the Labor Department said on Nov. 7. The median forecast in a Bloomberg News survey of economists called for a 235,000 increase.

Disappointing Payrolls

“The disappointing nonfarm payrolls data have given the market an opportunity -- especially for a lot of investors in Asia -- to take profits off the table from the dollar’s strength,” said Desmond Chua, a strategist at CMC Markets in Singapore. “I’m still a dollar bull.”

The dollar has risen 1.6 percent in the past month, the most among 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen is the biggest decliner with a 4.9 percent slide, while the euro has added 0.3 percent.

Hedge funds and other large speculators increased bets on an advance in the dollar versus eight of its major peers to a record 366,737, according to data from the Washington-based Commodity Futures Trading Commission.