The US dollar had its biggest weekly gain in 10 months amid speculation that the Federal Reserve will signal after a meeting next week that it is moving closer to raising interest rates for the first time since 2006.
The US currency reached a six-year high against the yen after a research paper from the San Francisco Fed said investors may be underestimating the pace of rate increases. Treasury two-year note yields jumped, burnishing the appeal of dollar-denominated assets. The pound touched a 10-month low as Scotland prepared to vote on independence, and currency-market volatility rose to the highest since February.
“The markets have shifted to expecting a more hawkish Fed statement,” Daniel Katzive, head of foreign-exchange strategy for North America at BNP Paribas SA, said in New York. “That’s boosted US front-end yields, and that should be supporting the dollar versus the euro and yen.”
The Bloomberg Dollar Spot Index rose 1.2 percent, the most since the five days ended Nov. 1 last year, in New York this week. The gauge touched 1,051.77 yesterday, the highest since July last year.
The yen dropped for a fifth week, the longest stretch this year, losing 2.1 percent to ￥107.34 per dollar. It touched ￥107.39, the weakest since Sept. 22, 2008. The euro was little changed at US$1.2963, after falling for the previous eight weeks. It reached US$1.2860, a 14-month low, on Tuesday. The shared currency rose 2.2 percent to ￥139.15.
Sterling fell for a second week against the dollar and euro as opinion polls showed Scotland’s vote on whether to leave the UK is too close to call.
One-month implied volatility, a measure of future price swings, jumped to the highest in almost three years before the referendum on Thursday. A “yes” vote would mean a 5 percent to 10 percent slide by the pound against the dollar within a month, according to 61 percent of the 31 respondents surveyed by Bloomberg between Sept. 5 and Thursday.
The currency declined 0.4 percent to US$1.6268 and touched US$1.6052, the weakest since Nov. 15 last year. Sterling depreciated 0.5 percent to ￡0.7969 per euro.
The Brazilian real and Australian dollar were the biggest losers among the greenback’s 31 major peers this week. The real slid 4.2 percent, the most since August last year, after a poll showed increased support for Brazilian President Dilma Rousseff amid a recession and above-target inflation. The Aussie sank 3.6 percent, also the most in more than a year.
Russia’s ruble sank to a record 37.97 per dollar as the EU and US widened sanctions amid conflict in Ukraine with pro-Russia rebels.
Taiwanese suppliers to Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電) are expected to follow the contract chipmaker’s step to invest in the US, but their relocation may be seven to eight years away, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. When asked by opposition Chinese Nationalist Party (KMT) Legislator Niu Hsu-ting (牛煦庭) in the legislature about growing concerns that TSMC’s huge investments in the US will prompt its suppliers to follow suit, Kuo said based on the chipmaker’s current limited production volume, it is unlikely to lead its supply chain to go there for now. “Unless TSMC completes its planned six
Power supply and electronic components maker Delta Electronics Inc (台達電) yesterday said second-quarter revenue is expected to surpass the first quarter, which rose 30 percent year-on-year to NT$118.92 billion (US$3.71 billion). Revenue this quarter is likely to grow, as US clients have front-loaded orders ahead of US President Donald Trump’s planned tariffs on Taiwanese goods, Delta chairman Ping Cheng (鄭平) said at an earnings conference in Taipei, referring to the 90-day pause in tariff implementation Trump announced on April 9. While situations in the third and fourth quarters remain unclear, “We will not halt our long-term deployments and do not plan to
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
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