Dollar Holds Drop After Fischer Talks Rates; Copper Jumps

(Bloomberg) — The dollar maintained declines amid speculation the Federal Reserve won’t be in a hurry to raise interest rates. Japanese stock futures fell after a retreat in the U.S., while copper gained before Chinese factory data.

The greenback was at $ 1.0949 per euro by 8:43 a.m. in Tokyo, after sliding more than 1 percent against the 19-nation currency on each of the past two trading days. New Zealand’s dollar was near record highs versus the euro and its Australian counterpart. Nikkei 225 Stock Average futures were bid down 0.4 percent in the Osaka pre-market, while U.S. equity futures rose 0.1 percent after benchmark indexes retreated Monday. Copper futures jumped 2.6 percent in New York, climbing for a fourth day. U.S. oil was at $ 47.44 a barrel after two days of gains.

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San Francisco Fed President John Williams speaks to economists in Sydney Tuesday after Stanley Fischer, the U.S. central bank’s vice chairman, said there won’t be a “smooth upward path” for rates, even with the first increase potentially warranted by late 2015. The prospect of a slower-than-estimated pace of tightening has knocked the dollar from a decade high. In Asia, gauges of March manufacturing are due for China and Japan, and Vietnam reports on inflation.

“Fischer’s comments have had a considerable impact on markets amid the market sentiment that has turned against the dollar since last week’s Fed meeting,” said Keisuke Hino, a foreign-exchange trader at Mizuho Bank Ltd. in New York. “The one-sided dollar buying scenario has crumbled so there is still scope for more dollar selling.”

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China Data

Tuesday’s provisional reading of the China PMI will probably come in at 50.5 for March, according to the median of 17 economists estimates compiled by Bloomberg. While marking a decline from 50.7 in February, levels above 50 indicate expansion in the sector.

Copper futures for May delivery climbed to $ 2.8635 a pound on the Comex, after reaching a three-month high Monday. The contracts settled above their 100-day average for the first time since September, triggering purchases. Copper for three-month delivery gained 1.2 percent last session to $ 6,120 a metric ton on the London Metal Exchange. China is the world’s biggest consumer of industrial metals.

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The Markit/JMMA Japan manufacturing gauge is projected to rise to 52 from 51.6 last month, according to a Bloomberg survey.

Dollar Index

Nikkei 225 futures were bid at 19,620 in the pre-market, from 19,690 at their close in Japan Monday. Yen-denominated contracts traded on the Chicago Mercantile Exchange were down 0.1 percent to 19,630 in Tuesday trading. The yen was little changed at 119.66 per dollar after climbing for a second day, adding 0.3 percent versus the greenback on Monday.

The Bloomberg Dollar Spot Index, a gauge of the currency against its 10 major peers, was little changed after falling 0.9 percent Monday, extending its slump from the highest level since at least 2004 to more than 3 percent. The kiwi gained 0.2 percent to 76.68 U.S. cents following a two-day gain against the dollar of 3.2 percent. New Zealand’s currency touched 97.85 Australian cents Monday, its strongest ever level.

Australia’s S&P/ASX 200 Index added 0.2 percent after slipping 0.3 percent Monday, while the NZX 50 Index in Wellington lost 0.1 percent.

Futures on the Kospi index in Seoul declined 0.2 percent in most recent trading, as contracts on Hong Kong’s Hang Seng and the Hang Seng China Enterprises gauges dropped 0.1 percent. The Bloomberg China-US Equity Index of the most-traded Chinese stocks in New York gained 1.3 percent on Monday.

Fed Speakers

Yields on 10-year U.S. Treasuries fell by two basis points, or 0.02 percentage point, to 1.91 percent Monday, amid Fischer’s remarks to the Economic Club of New York.

The comments came after Cleveland Fed President Loretta Mester said in a Bloomberg TV interview in Paris that it will be appropriate to raise rates this year. St. Louis Fed President James Bullard also speaks this week.

“Whether it’s going to be June or September, or some later date, or some date in between, will depend on the data,” said Fischer, responding to a question from the audience following a speech at the Economic Club of New York. Labor-market readings would be an important guide. The next Labor Department payrolls report is due April 3.

To contact the reporters on this story: Emma O’Brien in Wellington at eobrien6@bloomberg.net; Mika Otsuka in New York at motsuka3@bloomberg.net

To contact the editors responsible for this story: Emma O’Brien at eobrien6@bloomberg.net John McCluskey

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