The dollar weakened for the first time in four days against the yen before a U.S. government report that economists said will show durable goods orders declined in July.
The Bloomberg U.S. Dollar Index was little changed as investors weighed whether the world’s biggest economy is strong enough to support a reduction in Federal Reserve stimulus next month. The New Zealand dollar strengthened for the first time in six days as gains in Asia stocks revived demand for higher-yielding currencies. India’s rupee fell before a government report this week forecast to show economic growth slowed.
“The U.S. dollar will be driven by key data as the market reassesses the possibility that the Fed will taper in September,” said Roberto Mialich, senior currency strategist at UniCredit SpA in Milan. “It is likely to trade in a narrow range until we get a clearer picture.”
The dollar dropped 0.2 percent to 98.50 yen at 10:24 a.m. in London after strengthening 1.2 percent last week. The U.S. currency rose 0.1 percent to $1.3373 per euro after appreciating 0.4 percent last week. The euro fell 0.3 percent to 131.70 yen.
U.S. durable goods orders declined 4 percent from June, when they rose 3.9 percent, according to a Bloomberg survey before today’s Commerce Department report. The S&P/Case-Shiller index of home prices in 20 cities climbed 12.1 percent in June from a year earlier, after increasing 12.2 percent in May, a separate surveyed showed before the data tomorrow.
Fed Purchases
The Fed’s debate over when it will slow its $85 billion in monthly bond purchases has roiled global financial markets over the past three months. The Fed’s Open Market Committee holds its next meeting on Sept. 17-18.
“The market’s perception on Fed tapering in September remains divided,” said Junichi Ishikawa, an analyst at IG Markets Securities Ltd. in Tokyo. “The dollar will continue to be swayed by economic data.”
The Bloomberg U.S. Dollar Index was at 1,026.67 after advancing to 1,031.37 on Aug. 22, the highest since Aug. 2.
The dollar has strengthened 4.9 percent this year, according to Bloomberg Correlation Weighted Indexes that track 10 developed-market currencies. The euro was the best performer, rising 6.5 percent, while the yen slumped 8.9 percent.
The yen rose against all except two of its 16 major peers today after Bank of Japan Governor Haruhiko Kuroda said in Jackson Hole, Wyoming, on the weekend that the BOJ’s bond purchases have started to “exert effects” on the economy.
Kuroda said the push has helped boost stock prices and restrain bond yields, while supporting bank lending and bolstering confidence among consumers and businesses.
Kiwi Gains
The New Zealand dollar advanced 0.5 percent to 78.43 U.S. cents after sliding to 77.62 cents on Aug. 23, the weakest since Aug. 5. The MSCI Asia Pacific Index of shares rose 0.2 percent.
New Zealand’s imports exceeded exports by NZ$774 million in July, the statistics bureau said today. That compares with the forecast of a NZ$16 million deficit in a Bloomberg survey.
India’s rupee fell for the seventh time in eight days on concern slowing economic growth will make it tougher to attract investment as the U.S. prepares to rein in stimulus.
Gross domestic product in Asia’s third-largest economy rose 4.6 percent in the second quarter, down from 4.8 percent in the previous three months, according to a Bloomberg survey before the report is released on Aug. 30.
“The rupee’s losses are part a reflection of broad emerging-market vulnerability to the Fed unwinding its QE, and part a product of local structural and cyclical problems,” Tim Fox, chief economist at Emirates NBD in Dubai, wrote today in a note to clients. With “Indian GDP data expected to remain weak,” the rupee will stay under pressure, he said.
The rupee slumped 1.2 percent to 64.1188 per dollar after depreciating to a record-low 65.56 on Aug. 22.
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