(Bloomberg) — The euro traded at an 11-year low and gold advanced as investors await details of the European Central Bank’s bond-buying program. Chinese shares retreated as Asia’s biggest economy confirmed its weakest growth target in more than 15 years.
The 19-nation euro was at $ 1.1057 by 2:16 p.m. in Tokyo, its lowest level since September 2003, while gold climbed 0.4 percent. Benchmark indexes in Hong Kong and Shanghai dropped at least 0.8 percent, dragging the MSCI Asia Pacific Index down 0.2 percent. Standard & Poor’s 500 Index futures were little changed. Oil in New York traded above $ 50 a barrel.
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With ECB chief Mario Draghi set to unveil specifics of the bank’s 1.1 trillion euro ($ 1.2 trillion) stimulus plan, Goldman Sachs Group Inc. is forecasting euro parity with the dollar next year. The ECB has already cut deposit rates to below zero. China’s 7 percent 2015 economic growth target announced by Premier Li Keqiang underscores a shift away from expansion at all costs as the government seeks to clean up the nation’s environment, reduce graft and control a debt surge.
“The combination of deposit rates negative and QE is a very potent one, so it’s very euro negative,” Robin Brooks, chief currency strategist at Goldman Sachs, said in an interview in Sydney. “We have in our forecasts a very pronounced euro downswing, which is probably the most dollar-bullish forecast in all of our forecasts. We have the euro going to parity by the end of next year and then through parity to 0.9 by the end of 2017.”
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Gold for immediate delivery traded at $ 1,204.91 an ounce. The euro held declines against most major peers as the ECB prepares to buy 60 billion euros of assets a month to counter slowing growth and the threat of deflation.
Services growth in the euro area fell short of analysts’ estimates last month, in contrast to strong U.S. data, reports showed yesterday. Factory orders numbers from Germany and the U.S. are due today.
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New Zealand’s dollar slipped 0.6 percent to 75.48 U.S. cents, while Australia’s currency advanced 0.1 percent to 78.23 U.S. cents. A stronger Aussie and lower interest rates than the economy would normally warrant are unavoidable in an environment of international policy easing, central bank Deputy Governor Philip Lowe said.
A gauge of the U.S. dollar climbed 0.1 percent, extending gains from Wednesday after data showed U.S. service businesses expanded and companies added more than 200,000 jobs for a 13th straight month. While below expectations, the ADP Research Institute payrolls report followed a January gain that was larger than estimated.
China will strengthen supervision in shadow banking, according to a work report from the National Development and Reform Commission also released Thursday. It will aim to keep the urban unemployment rate under 4.5 percent, expand M2 money supply by about 12 percent, and target trade growth of about 6 percent this year, it said.
“The lower target reflects the desire to reduce additional leverage in the economy,” said Dariusz Kowalczyk, an economist at Credit Agricole CIB in Hong Kong. “The 2015 targets point to determination to push through with structural reforms even at the expense of somewhat slower growth.”
The Shanghai Composite Index, the world’s best-performing benchmark gauge in 2014, slipped 1.3 percent. Hong Kong’s Hang Seng Index retreated 0.9 percent and the S&P/ASX 200 Index pared loses to trade little changed in Sydney.
Malaysia’s SapuraKencana Petroleum Bhd led declines, plunging 8 percent after Vice Chairman Mokhzani Mahathir resigned, citing personal reasons. BHP Billiton Ltd., the world’s No. 1 mining company, dropped 0.5 percent in Sydney.
Hanergy Thin Film Power Group Ltd., China’s biggest solar manufacturer by market value, surged as much as 42 percent in Hong Kong. Hanergy is up 71 percent this week and is now valued at about $ 40 billion, more than Hong Kong’s Hang Seng Bank Ltd. The company said on Tuesday that 2014 earnings will rise more than 55 percent due to a “significant” increase in revenue and “substantial” gains from the disposal of five power projects in China.
MSCI’s Asia-Pacific gauge that includes Japanese shares was 0.1 percent weaker as gains in the Topix index offset losses in most other regional markets.
All but one of 10 industry groups dropped in the S&P 500 Wednesday as industrial companies tumbled 0.8 percent and energy stocks lost 0.2 percent. Health-care shares were the only group in the benchmark to advance, gaining 0.4 percent.
To contact the editors responsible for this story: Nick Gentle at [email protected] Ramsey Al-Rikabi
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