The
dollar advanced against most of its 16 major counterparts on signs Europe’s
debt crisis is weighing on economies across the globe, boosting demand for the
relative safety of the U.S. currency.
The
greenback maintained four days of gains against the euro before reports
forecast to show gross domestic product grew at a slower pace in Germany and
contracted in France. Data today showed Japan’s economy expanded less than
analysts estimated as exports and consumer spending weakened. Demand for the
Australian and New Zealand dollars was tempered as Asian stocks failed to
extend a weekly advance that was the biggest since January.
The
dollar traded at $1.2290 per euro from $1.2289 last week, when it climbed 0.8 percent. It was little changed at 78.31 yen. The euro was
at 96.26 yen from 96.17 last week, when it fell 1.1 percent.
The
pace of economic growth in Japan cooled to an annualized 1.4 percent in the second quarter from a revised 5.5 percent in the first three months of the year, the Cabinet
Office said in Tokyo on 13 August.
The
dollar has risen 7 percent in the past year, the
second-best performance among the 10 currencies tracked by the gauge. The yen
rose 2.9 percent and the euro lost 8.8 percent.
The
U.S. currency tends to strengthen during periods of financial stress because it
is the world’s reserve currency.
The
euro failed to rally after its biggest weekly loss in more than a month as
European leaders struggle to find a resolution to fiscal turmoil in the region.
The shared currency declined 0.8 percent in the week
ended Aug. 10, the most since July 6.
Bond
purchases by the European Central Bank won’t solve the difficulties of Spain
and Italy in maintaining investor confidence, ECB Governing Council member Luc Coene said in an interview with Belgian newspapers De Tijd and L’Echo published Aug.
11.
Spain’s
10-year yield climbed to a euro-era record of 7.75 percent
on July 25, while the rate on similar-maturity Italian bonds rose to a
six-month high on the same day. Italy is scheduled to sell 8 billion euros of
bills on 13 August.
Demand
for the dollar was tempered before reports this week that may show improving
retail sales and industrial production in the U.S. economy, the world’s
largest.
Sales
increased by 0.3 percent last month after a 0.5 percent decline in June. Output at U.S. factories, mines
and utilities may have risen 0.5 percent in July
after a 0.4 percent gain the prior period, economists
predict a Federal Reserve report will show on Aug. 15.
The
Australian and New Zealand dollars slid versus their major peers as signs the
global economic recovery is struggling curbed appetite for higher-yielding
assets. The so-called Aussie lost 0.3 percent to
$1.0551, while its Trans-Tasman counterpart declined 0.3 percent
to 81.09 U.S. cents.
The
implied volatility of three-month options on Group of Seven currencies
declined, according to a JPMorgan Chase & Co. measure. The gauge dropped to
8.44, a level unseen since July 20, when it touched the lowest level since
November 2007. Lower volatility makes investments in currencies with higher
benchmark lending rates more attractive because the risk in such trades is that
market moves will erase profits.