Dollar Touches 4-Week High Versus Peers on Taper Bets; Yen Rises – Bloomberg

The dollar reached the highest in
four weeks against a basket of its peers before data forecast to
show U.S. consumer spending rose for a third month, building the
case for the Federal Reserve to reduce stimulus next month.

The greenback headed for a third weekly advance after data
showed the U.S. economy grew faster than analysts forecast.
Turkey’s lira rose for a second day as concern receded of an
imminent strike against its neighbor Syria. South Korea’s won
was set for a five-day gain versus its 16 major counterparts as
data showed the nation’s industrial production unexpectedly
rose. The yen strengthened earlier amid speculation the
country’s exporters are repatriating earnings.

“The main scenario in the market is for the Fed to start
tapering in September, especially after the substantial upgrade
to U.S. growth,” said Noriaki Murao, the managing director of
the marketing group in New York at the Bank of Tokyo-Mitsubishi
UFJ Ltd. “That’s given the dollar a boost.”

The Bloomberg U.S. Dollar Index, which tracks the greenback
against 10 major peers, was at 1,033.30 as of 6:33 a.m. in
London from yesterday, after earlier touching 1,034.23, the
highest since Aug. 2. It has gained 0.7 percent this week and by
about the same amount this month.

The U.S. currency slipped 0.1 percent to 98.28 yen from
yesterday, when it advanced 0.7 percent, the most since Aug. 22.
The greenback was at $1.3243 per euro, following a 0.7 percent
advance yesterday to $1.3241. The yen was little changed at
130.17 per euro from 130.22.

The dollar has strengthened 1.1 percent against the euro
this week and 0.5 percent this month. It depreciated 0.4 percent
against the yen in the five days through today, paring its gain
in August to 0.4 percent

Consumer Spending

Purchases of goods and services in the U.S. probably
increased 0.3 percent last month after a 0.5 percent advance in
June, according to the median forecast in a Bloomberg News
survey of economists before today’s Commerce Department figures.

The final reading of the Thomson Reuters/University of
Michigan index of consumer sentiment for August will probably be
revised to 80.5, from an initial reading of 80, economists
forecast. The gauge was at 85.1 in July.

U.S. gross domestic product expanded at a 2.5 percent
annualized rate, up from an initial estimate of 1.7 percent,
data showed yesterday. Economists projected a 2.2 percent gain.

Fed policy makers are debating whether the U.S. economy is
strong enough to allow them to pare back monthly purchases of
$85 billion in Treasuries and mortgage debt. Officials will
reduce the amount at their next meeting on Sept. 17-18,
according to 65 percent of economists in an Aug. 9-13 Bloomberg
survey.

Syria Tension

Turkey’s lira headed for its biggest daily gain on a
closing basis in three weeks. The U.K. parliament yesterday
rejected Prime Minister David Cameron’s motion seeking
endorsement for military strikes against Syria. Cameron had
sought approval to join the U.S. in holding the Syrian
government accountable for alleged chemical-weapon attacks
against its own civilians.

“The Syrian situation appeared to be on hold,” Imre Speizer, a market strategist in Auckland at Westpac Banking
Corp. (WBC), wrote in a note to clients today. “Battered emerging
markets partly recovered.”

The lira strengthened 0.3 percent to 2.0294 per dollar from
yesterday. It has tumbled 4.7 percent this month.

‘Solid Fundamentals’

The won was little changed at 1,109.51 per dollar, poised
to complete a 0.7 percent weekly gain.

South Korean industrial production rose 0.9 percent in July
from a year earlier, official figures showed today, while
economists had estimated a 0.9 percent decline. Overseas
investors purchased $1.6 billion more South Korean shares than
they sold in August, according to exchange data.

“South Korea has relatively solid fundamentals compared to
other emerging countries, which prompted foreign investors to
buy local stocks and won-denominated assets,” said Lee Dae Ho,
a currency analyst at Hyundai Futures Corp. in Seoul.

The yen earlier rose as much as 0.3 percent against the
dollar amid speculation Japanese exporters were buying the
currency as they bring home income at the end of the month.

“The yen is stronger on month-end flows, not any news,”
said Yuji Saito, the director of foreign-exchange at Credit
Agricole Corporate & Investment Bank in Tokyo. “Any gains will
be limited by option-related selling beyond 98 per dollar.”

To contact the reporters on this story:
Kevin Buckland in Tokyo at
kbuckland1@bloomberg.net;
Masaki Kondo in Singapore at
mkondo3@bloomberg.net

To contact the editor responsible for this story:
Rocky Swift at
rswift5@bloomberg.net