The dollar will reverse recent gains versus the euro and the yen in coming months as the Federal Reserve pares monetary stimulus at a slower pace than the market expects, Bank of New York Mellon Corp. said.
China’s planned economic reforms are burnishing the yuan’s credentials as a currency of global trade, pushing its offshore rate to the highest versus its domestic value in 10 months while damping volatility.
China’s interest-rate increases and U.S. Treasury Secretary Timothy F. Geithner ’s commitment to a strong dollar suggest the nations may have reached a currency accord, Bank of New York Mellon Corp. said.
The yuan ranks in the top three on Pacific Investment Management Co.’s emerging-market investment radar, partly because of a $3.66 trillion currency pile that China’s central bank this week described as excessive.
The pound rose to a two-week high against the euro as European leaders clashed on banking plans and a report showed German business confidence declined, boosting demand for the relative safety of the U.K. currency.