The US dollar pushed its winning streak to seven straight months for the first time in a decade as a wave of easing by the world’s major central banks enhanced the appeal of US assets.
The euro posted its biggest monthly decline since September 2011 after the European Central Bank’s announcement of sovereign-bond purchases on Jan. 22. Russia’s ruble plunged after an unexpected interest-rate cut and Canadian dollar fell to an almost six-year low. Treasuries had the best January in 27 years. The US unemployment rate is forecast to remain at a more than six-year low before the Feb. 6 report as the Federal Reserve looks to tighten monetary policy.
“In a world where everyone’s easing policies, standing still is relative tightening,” Alan Ruskin, the global head of G-10 foreign exchange at Deutsche Bank AG, said in a telephone interview. “Traders will be reluctant to sell the US dollar on anything more than a day trade.”
The Bloomberg Dollar Spot Index, a gauge of the currency’s performance against 10 major peers, rose 3.3 percent in January to close at 1,167.89, its highest in data going back to 2004. It never before posted a seven-month winning streak.
The greenback rose 6.7 percent to US$1.1291 per euro for a seventh month of gains.
The yen strengthened 1.9 percent to break a six-month skid versus the greenback.
The shekel was the biggest gainer of the dollar’s 31 major peers this week, rising 2 percent, after the Bank of Israel held its benchmark rate at a record low. The ruble was the biggest loser, sliding to its weakest since December after Russia’s central bank cut the benchmark rate from an 11-year high.
Canada’s dollar fell for a 10th week, the longest stretch since 2000, after the Bank of Canada last week surprised markets by reducing its benchmark rate for the first time since 2010 to counter “the recent sharp drop in oil prices,” the nation’s largest export. New Zealand’s dollar touched a more than three-year low as the central bank shifted its policy bias to neutral, saying the currency remains unjustifiably and unsustainably high.
The euro declined versus 14 of its 16 major counterparts in January and touched an 11-year low after ECB President Mario Draghi unveiled a program of sovereign-debt purchases to supplement existing easing measures. The central bank will buy 60 billion euros (US$68 billion) a month of bonds until at least September 2016, Draghi said on Jan. 22.
The British pound depreciated 0.5 percent to ￡0.7513 per euro, the biggest weekly decline since the five-day period ending Dec. 12. The sterling strengthened 0.3 percent to US$1.5030, snapping a six-week run of declines.
Asia’s emerging-market currencies retreated for a fifth month, the longest run of declines since the region’s financial crisis in 1998, as monetary easing by nations including Singapore and India spurred demand for US dollars.
Singapore said it would slow the pace of exchange-rate appreciation against a basket of currencies, becoming at least the ninth nation to loosen policy this month.
The Monetary Authority of Singapore will reduce the slope of the policy band for the city-state’s dollar, while keeping a “modest and gradual appreciation,” it said on Thursday.
The move follows surprise interest-rate cuts by Denmark, Turkey, India, Canada and Peru this month as global central banks seek to shore up growth amid dwindling inflation. The European Central Bank announced a bond-buying program that will debase the euro.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, dropped 0.6 percent last month, contributing to a 3.9 percent retreat since August last year.
The New Taiwan dollar dropped the most in three weeks.
The NT dollar closed down 0.6 percent, the most since Jan. 5, to NT$31.512 against its US counterpart, Taipei Forex Inc prices show.
The ringgit retreated 3.6 percent in January, Asia’s biggest decline, as a 14 percent slump in Brent crude worsened prospects for Malaysia, a net oil exporter. Indonesia’s rupiah lost 2.3 percent, the Singapore dollar depreciated 2 percent, and the won fell 0.3 percent.
The yuan weakened 0.8 percent, a third monthly decline, after reports showed Chinese industrial profits fell the most in at least three years in December and the nation’s foreign-exchange reserves dropped for a fourth month.
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