Kiwi up after China survey, Canadian dollar at
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[June 23, 2014]
By Patrick Graham
LONDON (Reuters) - The
Australian and New Zealand dollars both jumped about
half a percent on Monday after a survey pointed to the
first expansion in six months by China's manufacturing,
a sector that is crucial to world growth.
The Canadian dollar also reached a five-month high, building on its
0.6 percent gain on Friday. Surprisingly high inflation and robust
retail sales made it look less likely the central bank would
maintain its accommodative policy stance.
The upbeat HSBC China PMI report offered relief to investors
fretting about the health of Australia's biggest export market and a
recent slide in iron ore prices. The Aussie rose to as high as
$0.9444, near its April 10 peak of $0.9461.
"There has just been a bit of a risk-on play this morning," said
Stephen Gallo, head of European currency strategy at Canadian bank
BMO in London. "The Aussie, kiwi and Canadian dollar all look
wrapped up in that."
Gallo also said "short" bets on a weaker Canadian dollar - a popular
trade over the past year - had been squeezed since the inflation
numbers last week.
"I wouldn't advise going short here yet, but the move in spot does
look mainly like the result of positioning and contrary to the
long-term drivers for the (Canadian) dollar."
The Canadian dollar was last around C$1.0724 per U.S. dollar, after
touching a high of C$1.0717.
The euro inched down after flash purchasing manager surveys from
both Germany and France came in below expectations. But the trend
remained the same - robust growth in Europe's biggest economy and a
continuing struggle for some of its neighbors.
The data followed a weekend interview in which European Central Bank
chief Mario Draghi laid out the case for sticking with the bank's
current program of stimulus. He also said outright quantitative
easing could be used if inflation expectations deteriorated in the
"The PMI surveys say roughly the same thing as Draghi's comments
over the weekend: policy will stay very accommodative in Europe for
a long time to come," said a dealer with one London bank. "We knew
this already, so the reaction on the euro has again been minimal."
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The euro was last down 0.1 percent at $1.3590, close to the day's
lows of $1.35865 in Asian trade.
Against the yen, the dollar was just over 0.1 percent weaker at
The British pound was firmer, trading at $1.7024, up 0.1 percent
from last week, on speculation the Bank of England will raise
interest rates before the end of this year. It climbed to a 5
1/2-year high of $1.7064 last Thursday.
Bank of England policymaker David Miles tried to play down those
expectations, saying subdued inflation in Britain would enable
policymakers to raise interest rates gradually.
Still, many speculators are pouring funds into sterling, searching
for a trend in the absence of bigger moves by the euro, dollar and
yen. Data from a U.S. financial watchdog showed speculators' long
position in the pound futures hit the highest level since late 2007
(Editing by Larry King)
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