Azernews.Az

By Bloomberg

The dollar rose to a two-year high against the euro amid concern early elections in Greece risk severing the country’s bailout agreement.

The greenback held gains against most of its major peers before a report today which economists predict will show U.S. consumer confidence climbed in December. The Malaysian ringgit slid to a three-week low as oil headed for its worst annual slump since 2008. The euro has depreciated 12 percent against the dollar this year, poised for its biggest decline since 2005.

“The euro is going to break $1.20 against the dollar in the first quarter,” said Kazuo Shirai, a trader at MUFG Union Bank NA in Los Angeles. “More than continued improvement in the U.S., it’s a case of Europe and other regions stumbling.”

The dollar gained 0.1 percent to $1.2136 against the euro as of 11:50 a.m. in Tokyo, after reaching $1.2135, its strongest level since August 2012. The euro fell 0.3 percent to 146.25 yen. The U.S. currency slid 0.1 percent to 120.50 yen.

The greenback is set to gain against all of its 31 major counterparts in 2014 for the first time in data going back to 1989. Pledges from the Bank of Japan and European Central Bank to keep their rates at record lows contrast with the Federal Reserve’s moving to increase borrowing costs. ECB President Mario Draghi signaled the central bank may expand stimulus to include buying sovereign bonds after inflation slowed to the weakest in five years. Officials next meet Jan. 22.

“The U.S. economy has been doing so well,” said Joseph Capurso, a currency strategist at Commonwealth Bank of Australia in Sydney. “The market’s been bracing for Fed tightening at some point next year.”

Greek Election

The dollar is set to advance to 130 yen next year, Capurso said, a level last seen in 2002. The U.S. currency will probably strengthen past $1.20 versus the euro if the opposition Syriza party prevails in Greece’s elections and jeopardizes the terms of the country’s financial bailout, he said.

Prime Minister Antonis Samaras failed in his third and final attempt to persuade parliament to support his candidate, Stavros Dimas, for head of state. Samaras said he will ask for the election to be held on Jan. 25.

The ringgit fell 0.2 percent to 3.5043 against the dollar, the weakest level since Dec. 8. The Malaysian currency has declined 6.5 percent this year, the worst performance among emerging Asian currencies.

The plunge in crude prices to a five-year low will probably pare economic growth in net oil exporter Malaysia to the lower end of its 5 percent to 6 percent estimate for next year, Abdul Wahid Omar, a minister in the prime minister’s office, said Dec. 17. Oil has tumbled more than 45 percent this year.

South Korea’s won dropped 0.1 percent to 1,098.70 against the dollar, halting a three-day advance. The country’s industrial output in November fell 3.4 percent from the previous year, the biggest drop since January, according to a statement today from Statistics Korea.