Date registered: Sep 2004
Vehicle: 95 E300
Location: Inside my head
Mentioned: 0 Post(s)
Quoted: 392 Post(s)
RE: The Dead Duck Dow ends year in the red.
A Labor Department report on Jan. 6 will show U.S. employers added 200,000 new workers in December, according to the median estimate of 50 economists surveyed by Bloomberg. The economy added an average of 167,000 jobs a month last year. The jobless rate is predicted to stay at 5 percent, less than half Germany's 11.5 percent.
``The dollar will get support from strong economic data, such as the jobs report,'' Tohru Sasaki, a currency strategist in Tokyo at JPMorgan Chase & Co. and a former chief currency trader at the BOJ, said in an interview on Dec. 29. ``The trend of dollar buying will continue for another week.''
U.S. 10-year Treasury notes yielded 1.07 percentage points more than similar-maturity German government bonds, compared with an average 0.43 percentage point in the past five years.
The difference between U.S. notes and Japanese 10-year debt was 2.87 percentage points on Dec. 30. The gap averaged 2.82 percentage points since 2003. U.S. two-year Treasuries gave investors the biggest yield premium last month since 2001.
`Nearing the End'
The dollar may fall should minutes from the Fed's December meeting show waning support for additional rate increases. The U.S. currency had its biggest weekly drop in six years against the yen after the Fed said Dec. 13 that rates are no longer stimulating economic growth. The Fed will release the minutes from that meeting at 2 p.m. in Washington today.
``The Fed is nearing the end of its tightening cycle and on a weekly basis the release of the minutes may impact the dollar negatively,'' Samarjit Shankar, director of global strategy for the foreign exchange group in Boston at Mellon Financial Corp., said in an interview on Dec. 30.
Any sell-off will be short-lived and the dollar may recover to end January at $1.15 per euro, said Shankar.
Some investors are unfazed by the rise in two-year U.S. Treasury yields above 10-year yields, creating a so-called inverted yield curve, said Greg Salvaggio, vice president of capital markets at Tempus Consulting Inc., a hedge fund manager in Washington. An inverted curve has preceded the past four recessions.
This time, the inversion reflects demand from foreign investors for Treasuries rather than the likelihood of the U.S. economic expansion ending, Salvaggio said in an interview on Dec. 30.
Foreigners held a net $2.1 trillion of U.S. government debt at the end of October, an increase of $217 billion last year, the most recent data from the Treasury Department show. During that month international investors increased holdings of U.S. assets by a record $106.8 billion.
``As long as these investors continue to put money into our paper, does the inversion matter?'' said Salvaggio. He predicts the dollar will strengthen to $1.15 per euro in three months and 120 yen.
...........................BUY SELL HOLD
Euro......................13 24 9
Yen.......................12 28 6
British pound..........7 21 17
Australian dollar...14 21 11
Swiss franc...........12 14 20
Canadian dollar....20 11 15
Euro versus yen....25 13 8
To contact the reporter on this story:
Kabir Chibber in London at email@example.com.