Dollar Falls as McTeer Says Current Account Gap Hurts Currency
Oct. 8 (Bloomberg) -- The dollar weakened against the euro and the yen after Federal Reserve Bank of Dallas President Robert McTeer said the current account deficit will lead to a decline in the U.S. currency's value.
McTeer is at least the third Fed official in the past month to link the dollar's value with the gap in the U.S. current account, which reached a record $166.2 billion in the second quarter. ``Over time I think there's only one direction'' for the dollar, said McTeer in a speech in New York. The Fed doesn't set policy for the U.S. currency, which is managed by the Treasury.
``The issue of the current account is clearly something the Fed wants to have a view on,'' said Richard Yetsenga, a currency strategist in Sydney at Deutsche Bank AG. ``It's modestly weakening the dollar.''
Against the euro, the dollar fell to $1.2338 at 8:49 a.m. in London, from $1.2285 late yesterday in New York, according to electronic foreign-exchange trading system EBS. It also fell to 110.39 yen, from 111.23 yen. The U.S. currency is still set for a weekly gain of 0.7 percent versus the euro before a report that will probably show U.S. payrolls rose the most in four months.
U.S. employers created 148,000 jobs last month, according to the median of 74 forecasts in a Bloomberg poll. The Labor Department's report is scheduled for 8:30 a.m. Washington time.
A separate auction of economic derivatives yesterday indicated traders and investors expect a gain of 134,000 jobs. It was the first of two payroll derivative auctions held by Deutsche Bank AG and Goldman Sachs Group Inc., and marketed through ICAP Plc, the world's largest interbank securities brokerage. The second auction will be completed at 8 a.m. in New York. |
