BLBG: Dollar, Yen Fall as Bank Earnings Spur Risk Demand Before Fed
By Ye Xie and Bo Nielsen
Nov. 4 (Bloomberg) -- The dollar dropped from almost a one- month high versus the euro and the yen fell as increased bank earnings fueled demand for higher-yielding assets before the Federal Reserve’s statement on monetary policy.
South Africa’s rand rose against all of its major counterparts as gold climbed to a record and the nation’s central bank backed away from previous government comments that it would try to stem the currency’s advance.
“A weaker dollar trend starts to re-emerge after the temporary setback in risk sentiment over the past few days,” said Sverre Holbek, a Copenhagen-based analyst at Danske Bank A/S. “We are looking for the global recovery to continue in coming months. The Fed won’t change its statement drastically, which is going to further fuel risk taking.”
The dollar weakened 0.7 percent to $1.4829 per euro at 10:27 a.m. in New York, from $1.4724 yesterday. The dollar will decline to $1.55 per euro in three months before recovering to $1.50 in six months, according to Holbek. The yen depreciated 1.1 percent to 134.41 per euro, from 133.01. Japan’s currency slid 0.3 percent to 90.64 per dollar, from 90.33.
The rand rallied for a second day, advancing 2.2 percent to 7.6713 per dollar as gold for December delivery reached a record $1,096.20 on speculation central banks and investors will purchase the metal to hedge against the dollar’s 5.8 percent drop versus the euro this year.
South Africa’s currency also advanced as Reserve Bank Deputy Governor Daniel Mminele said in a copy of a speech posted on the bank’s Web site yesterday that policy makers will continue accumulating reserves without intervening in the foreign-exchange market.
Stronger Pound
Sterling rose 0.5 percent to $1.6522 and 0.4 percent to 89.25 pence per euro as Markit and the Chartered Institute of Purchasing and Supply said a gauge of service industries rose to 56.9, the highest level since August 2007.
Societe Generale, France’s second-biggest bank, said today net income doubled to 426 million euros ($627 million), compared with the 399 million euro median estimate of 11 analysts surveyed by Bloomberg.
