The dollar rose in Asia on speculation Federal Reserve Chairman Alan Greenspan will say he is confident the U.S. economy will extend its expansion without signaling an increase in interest rates before September. ``He has to acknowledge that the economy is doing well and the Fed will be looking to move rates up, while at the same time saying it's not going to happen overnight,'' said Jake Moore, a currency strategist in Tokyo at Barclays Capital Inc. ``The momentum on balance is positive for the dollar.''
Demand for the euro also waned on expectations an industry survey today will show German investor confidence fell for a fourth month in April. By contrast, the Conference Board's U.S. index of leading economic indicators had its greatest year-on- year increase in two decades. Against the euro, the dollar rose to $1.1967 at 1:42 p.m. in Tokyo from $1.2020 late yesterday in New York, according to EBS, an electronic foreign-exchange dealing system. It was at 108.51 yen, from 108.45. The dollar today strengthened versus 13 out of 16 most traded currencies tracked by Bloomberg. The euro's decline accelerated when it fell below $1.1980, a level where automatic orders to sell were triggered, according to Keizo Tanaka, manager of the market trading office at Resona Bank Ltd. The slide may extend should the currency breach $1.1950, he said. Traders typically place these orders to stop losses in the event their bets go the wrong way. The yield on September Eurodollar futures was at 1.580 percent in Singapore, falling from as high as 1.615 percent on Thursday, as traders reduced odds of a rate boost. The futures settle at the three-month London interbank offered rate, or Libor, which has averaged about 23 basis points more than the Fed's target over the past 10 years.
`Pressuring the Euro'
Greenspan speaks in Washington to the Senate Banking Committee today and at the Joint Economic committee tomorrow. The Fed's benchmark rate is at a 45-year low of 1 percent, half that of the European Central Bank. The ZEW Center for European Economic Research's index of German institutional investor and analyst sentiment may have fallen to 57, the lowest since August, from 57.6 in March, the median forecast of 35 economists showed. The index touched a 42- month high in December.
Issing Remarks
European Central Bank Chief Economist Otmar Issing said he expects a ``still cautious'' economic recovery in Europe and Germany, said, citing an interview with by German television broadcaster ZDF. Issing is one of 18 people who set interest rates in the euro region. ``Economic data out of Europe have shown the European economy lags behind Japan and the U.S., pressuring the euro,'' said Satoru Ogasawara, a Tokyo-based currency strategist at Credit Suisse First Boston. The bank's three-month forecast for the euro is at $1.20, he said. The 10-year U.S. Treasury note has fallen and yields have risen for four weeks after increases in consumer prices, retail sales and employment boosted speculation the Fed will raise its benchmark rate as soon as September. The 4 percent note due in February 2014 was little changed at 96 30/32, to yield 4.38 percent. Germany's 4 1/4 percent German bond maturing in January 2014 yielded 4.10 percent.
Tanigaki on G-7
Exchange rates will be among the topics discussed when Group of Seven finance ministers and central bankers meet in Washington this week, Japanese Finance Minister Sadakazu Tanigaki said. ``G-7 Seven members will discuss the state of economies based on issues and policies of Japan, the U.S. and Europe,'' he said at a press conference in Tokyo. ``Foreign exchange rates will be part of their talks, but they won't be the only topics.'' The dollar has gained 5.3 percent against the euro this year after falling 17 percent last year. Officials from the G-7, which comprises the U.S., Japan, Germany, France, Italy, Britain and Canada, in February issued a statement against ``excess volatility'' in the currency market.
``The markets have been here so many times before that I think they've thrown in the towel,'' Claudio Piron, currency strategist in Singapore at Standard Chartered Plc, said in an interview. ``That's actually the last moment you really want to be complacent about the situation.'' The Conference Board yesterday said its index of leading economic indicators rose 0.3 percent in March. The New York- based private research group uses 10 statistics ranging from money supply to jobless claims to gauge how the economy will perform over the next three to six months. The year-over-year index gain of 4.4 percent was the most since April 1984. ///www.bloomberg.com