The yen and the Swiss franc rose against all of their most-traded counterparts as investors sought the currencies’ relative safety amid declines in equities and commodities.
The dollar erased gains against the euro as stocks trimmed losses after a report showed U.S. factory orders rose more than forecast. Canada’s dollar fluctuated after rising earlier as Prime Minister Stephen Harper’s Conservatives won a majority of seats in Parliament for the first time.
“It’s somewhat of a risk-off day, and the more defensive currencies are outperforming,” said Paul Mackel, a currency strategist at HSBC Holdings Plc in London. “Some people have been looking at how crowded it was getting to be in terms of short dollars, so you’re seeing some risk being taken off the table.” A short is a bet a currency will fall.
The dollar earlier strengthened from a 16-month low against the euro on speculation the European currency’s gains this year may not be sustained.
Orders placed with U.S. factories rose 3 percent in March, a fifth consecutive increase, the Commerce Department said today. The median forecast of economists projected a 2 percent increase.
The pound was the worst performer among major currencies, dropping as an index of U.K. manufacturing growth declined. Markit Economics and the Chartered Institute of Purchasing and Supply index fell to 54.6 in April from 56.7 in March.
Bank of England Governor Mervyn King said high debt levels pose “massive” economic challenges that would be exacerbated by increased long-term interest rates.
“The market continues to price out the chance of a rate hike before the end of August,” said Stephen Gallo, head of market analysis at Schneider Foreign Exchange in London. The delay in an interest rate increase will cause a “selloff in the pound.”
Bank of England policy makers are split four ways over monetary policy. The central bank probably will leave the key interest rate at a record-low 0.5 percent at the next rate meeting on May 5.
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