The euro rose against a majority of its most-traded counterparts as an agreement on a second international bailout for Greece reduced investor concern the region’s debt crisis will worsen.
The 17-nation currency reached a three-month high against the yen this week and broke through key technical levels against its Japanese and US peers.
The US dollar dropped against its higher-yielding counterparts as reports showed an improving economic recovery, dampening demand for safety.
Currencies of commodity-exporting countries rallied as oil surged and volatility fell to a three-year low. The European Central Bank (ECB) will offer banks unlimited three-year loans next week.
“There was some optimism following the Greek deal and optimism ahead of next week’s second liquidity tender by the ECB,” said Omer Esiner, chief market analyst in Washington at Commonwealth Foreign Exchange Inc. “The euro is rallying and all gauges of risk appetite are pointing to a risk-on week, whether it’s the Australian dollar, the New Zealand dollar, crude oil or the [US] dollar being down.”
The euro rose 2.3 percent to US$1.3448, reaching US$1.3487, the highest level since Dec. 2. It rallied 4.4 percent to ￥109.18, reaching ￥109.25 on Friday for the first time since Oct. 31. The yen weakened 2.1 percent to ￥81.20 per US dollar and touched ￥81.22, the weakest level since July.
The implied volatility of three-month options on G7 currencies as tracked by the JPMorgan G7 Volatility Index fell to 9.71 percent on Friday, the least since Aug. 8, 2008, as options traders scaled back the risk of large exchange-rate swings. Lower volatility makes investments in currencies with higher benchmark rates more attractive because the risk in such trades is that market moves will erase profits.
The Swiss franc led gains against the US dollar among the 16 most-traded currencies tracked by Bloomberg. The currency appreciated 2.6 percent to SF0.8960 against the greenback and gained 0.3 percent to SF1.2051 per euro.
Meanwhile, the pound fell the most in eight months versus the euro this week as Bank of England (BOE) minutes showed two policymakers voted for a larger increase in asset purchases than agreed at this month’s meeting.
Gilts advanced after Bank of England policymaker David Miles said he and Adam Posen voted to add ￡75 billion (US$119 billion) to the central bank’s stimulus plan because the economy is in a “precarious situation.” The Monetary Policy Committee finally agreed on a ￡50 billion increase. Sterling fell to a two-month low against the euro as a report confirmed Britian’s GDP shrank last quarter.
The pound depreciated 2.3 percent this week to ￡0.849 per euro at 4:11pm London time on Friday, the biggest weekly drop since June 3.
Jensen Huang (黃仁勳), founder and CEO of US-based artificial intelligence chip designer Nvidia Corp and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) on Friday celebrated the first Nvidia Blackwell wafer produced on US soil. Huang visited TSMC’s advanced wafer fab in the US state of Arizona and joined the Taiwanese chipmaker’s executives to witness the efforts to “build the infrastructure that powers the world’s AI factories, right here in America,” Nvidia said in a statement. At the event, Huang joined Y.L. Wang (王英郎), vice president of operations at TSMC, in signing their names on the Blackwell wafer to
AI BOOST: Although Taiwan’s reliance on Chinese rare earth elements is limited, it could face indirect impacts from supply issues and price volatility, an economist said DBS Bank Ltd (星展銀行) has sharply raised its forecast for Taiwan’s economic growth this year to 5.6 percent, citing stronger-than-expected exports and investment linked to artificial intelligence (AI), as it said that the current momentum could peak soon. The acceleration of the global AI race has fueled a surge in Taiwan’s AI-related capital spending and exports of information and communications technology (ICT) products, which have been key drivers of growth this year. “We have revised our GDP forecast for Taiwan upward to 5.6 percent from 4 percent, an upgrade that mainly reflects stronger-than-expected AI-related exports and investment in the third
RARE EARTHS: The call between the US Treasury Secretary and his Chinese counterpart came as Washington sought to rally G7 partners in response to China’s export controls China and the US on Saturday agreed to conduct another round of trade negotiations in the coming week, as the world’s two biggest economies seek to avoid another damaging tit-for-tat tariff battle. Beijing last week announced sweeping controls on the critical rare earths industry, prompting US President Donald Trump to threaten 100 percent tariffs on imports from China in retaliation. Trump had also threatened to cancel his expected meeting with Chinese President Xi Jinping (習近平) in South Korea later this month on the sidelines of the APEC summit. In the latest indication of efforts to resolve their dispute, Chinese state media reported that
CHINESE EXPORT CURBS: A dispute between China and the Netherlands could halt chip supply, affecting vehicle production, US and European auto associations said Groups representing major automakers late on Thursday warned that a chip disruption stemming from a dispute between China and the Dutch government could quickly affect US auto production. Automakers and their suppliers received notice from chipmaker Nexperia (安世半導體) last week that it could no longer guarantee delivery of its chips, the European Automobile Manufacturers Association said, adding that manufacturing could be significantly disrupted. In the US, the Alliance for Automotive Innovation, which represents General Motors, Toyota, Ford, Volkswagen, Hyundai and nearly all other major automakers, urged a quick resolution. “If the shipment of automotive chips doesn’t resume — quickly — it’s going to
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