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Jun 14, 2012 8:55 AM GMT+0800 The dollar remained lower against the euro following a two-day slide before U.S. data that may show consumer prices fell, rekindling expectations the Federal Reserve will take more steps to bolster the economic recovery. The euro maintained a rally from an 11-year low versus the yen amid speculation traders are paring their bearish bets on the European currency before Greek elections on June 17. The Fed is scheduled to hold a two-day policy meeting starting June 19. New Zealand’s dollar strengthened against all of its 16 major counterparts after the central bank left the benchmark interest rate unchanged. Audio Download: Nomura’s Nordvig Says Euro May Decline to $1.10 .“The dollar is susceptible to weakening because expectations for additional easing are rising ahead of the policy meeting next week,” said Marito Ueda, senior managing director in Tokyo at FX Prime Corp. (8711), a currency margin company. “A decline in employment and the economy is the biggest concern for the Fed.” The dollar traded at $1.2564 per euro as of 9:34 a.m. in Tokyo after falling 0.4 percent to $1.2557 in New York yesterday. It lost 0.2 percent to 79.36 yen. The 17-nation euro was at 99.72 yen following a 0.7 percent advance in the previous two days to 99.80. The common currency touched 95.60 on June 1, the lowest since November 2000. The U.S. consumer-price index probably fell 0.2 percent in May from a month earlier, the most since December 2008, the median estimate of economists showed in a Bloomberg News survey. The Labor Department will release the figures today. “The situation in Europe poses significant risks to the U.S. financial system and economy and must be monitored closely,” Fed Chairman Ben S. Bernanke told lawmakers on June 7. “As always, the Federal Reserve remains prepared to take action as needed to protect the U.S. financial system and economy in the event that financial stresses escalate.” The Fed bought $2.3 trillion of bonds in two rounds of so- called quantitative easing from 2008 through 2011 to stimulate the economy through lower borrowing costs. Hedge funds and other large speculators increased their bets on a drop in the euro against the dollar to a record high of 214,418 last week, figures released June 8 by the Washington- based Commodity Futures Trading Commission showed. Greeks will vote again this weekend after a May election failed to produce a coalition government. A poll by Kapa SA showed pro-bailout New Democracy party retained its lead over Syriza, with the support of 26.1 percent of 1,012 Greeks surveyed. Anti-bailout Syriza had 23.6 percent. “Traders are covering their short positions on the euro because such positions have substantially accumulated,” said Noriaki Murao, New York-based managing director of the marketing group at the Bank of Tokyo-Mitsubishi UFJ Ltd. “Despite the rebound in the euro, I don’t think anything has gotten better in the European situation.” A short position is a bet that an asset will decline in value. The euro has weakened 1.5 percent in the past three months, according to Bloomberg Correlation-Weighted Indexes that track 10 developed-nation currencies. Australia’s dollar was the worst performer with a 2.9 percent decline during the period, followed by a 2 percent slide for New Zealand’s currency. The Reserve Bank of New Zealand kept the official cash rate unchanged at 2.5 percent today. There was a 20 percent chance of a rate cut, interest-rate swaps data compiled by Bloomberg showed. “Recent weakness in the kiwi has allowed the RBNZ to leave interest rates on hold because we’re getting, to a certain extent, stimulus to the economy as a consequence of that,” said Thomas Averill, managing director in Sydney at Rochford Capital, a currency and interest-rate risk-management company. “That’s certainly supportive of the New Zealand dollar.” The South Pacific nation’s currency, known as the kiwi, advanced 0.4 percent to 77.60 U.S. cents. We are high quality suppliers, our products such as Turbo VNT Parts Manufacturer , Turbo Repair Kits for oversee buyer. To know more, please visits Compressor wheels.
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