US Dollar Gains As Gold Declines
Washington (Jan 15) The World Bank raised its global growth forecasts as a recovery in advanced economies tempers the impact of tighter monetary conditions on developing markets. The Federal Reserve releases its Beige Book business survey today, while Fed officials Charles Evans and Dennis Lockhart are set to speak as the U.S. tapers monthly bond purchases. Bank of America Corp. is scheduled to report fourth-quarter earnings.
Fed policy makers said on Dec. 18 they will cut monthly bond purchases to $75 billion from $85 billion, citing improvements in the labor market. They will continue to trim it by $10 billion at each policy meeting before ending the program in December, according to a Bloomberg poll of 41 economists taken Jan. 10. Policy makers next gather on Jan. 28-29.
Evans, who voted in favor of reducing stimulus last month, had said on Dec. 6 he wanted to see more signs inflation would accelerate and job market gains would continue before the central bank changed policy. Lockhart said two days ago that weak payroll growth last month shouldn’t discourage policy makers from reducing monthly bond purchases as long as the economy continues to gain strength. Neither are voting members this year.
China’s foreign-exchange reserves, the world’s largest, rose to a record $3.82 trillion at the end of December from September’s $3.66 trillion.
Dollar Gains
The Bloomberg Dollar Spot Index climbed 0.3 percent following a 0.4 percent jump yesterday, the most since Dec. 18. The gauge measures the greenback against 10 major peers, including the Korean won, Mexican peso and Brazilian real.
The U.S. currency strengthened 0.1 percent to 104.34 yen today. The yen advanced 0.4 percent to 142.02 per euro. South Africa’s rand and the Aussie dollar had the biggest declines among currencies.
Treasury 10-year notes were little changed, leaving the 10- year yield at 2.88 percent, after the rate jumped five basis points yesterday.
Gold declined to $1,239.63 an ounce. Lead fell 1 percent and zinc retreated 0.9 percent. China is the biggest buyer of industrial metals. Cocoa traded in New York jumped 0.6 percent after the European Cocoa Association reported processing of beans jumped 6.2 percent in the fourth quarter. The so-called grind, an indication of demand, was expected to rise 4.1 percent, the mean estimate of 12 traders surveyed by Bloomberg.
