BLBG: Yen Trades Near Four-Week Low Before Business Confidence Survey
The yen traded near a four-week low versus the dollar before a Bank of Japan survey that economists say will show business sentiment slumped to the lowest in more than 30 years.
Japan’s currency may extend losses against the greenback after its biggest quarterly drop since 2001 on speculation Japan’s large manufacturers became more pessimistic as exports collapsed. The euro may add to last quarter’s decline against the dollar on expectations European Central Bank policy makers will cut interest rates tomorrow, diminishing the appeal of assets in the 16-nation region.
“We should be braced for a terrible number and even if it does come out a little better than the extreme forecasts, people are not going to become bullish on the Japanese economy,” said Sean Callow, a senior currency strategist in Sydney at Westpac Banking Corp., Australia’s biggest lender by market value. “The dollar is likely to rally against the yen rather than fall.”
The yen traded at 98.98 versus the dollar as of 8:25 a.m. in Tokyo, from 98.96 yesterday when it touched 99.36, the weakest level since March 5. Japan’s currency was at 131.06 against the euro from 131.13. The dollar traded at $1.3242 versus the euro from $1.3250.
Japan’s currency tumbled 8.4 percent against the dollar in the first quarter, the worst performance since the last three months of 2001, and weakened 3.5 percent versus the euro, the first quarterly drop since June. The yen will weaken to 100 by the end of December, according to the weighted forecast from a Bloomberg News survey of analysts.
Confidence Drops
Confidence among Japan’s large manufacturers dropped to minus 55 in March from minus 24 in December, according to a Bloomberg survey of economists before today’s Tankan report. That would be the lowest since 1975 and the biggest drop since the bank started the survey. A negative number means pessimists outnumber optimists. The report is due at 8:50 a.m. in Tokyo.
The euro may decline against the dollar as economists in a separate Bloomberg survey estimate the ECB will lower rates to 1 percent from 1.5 percent at this month’s meeting.
The yield on the three-month Euribor interest-rate futures contract for June delivery, which reflects the outlook for the euro-region’s borrowing costs, declined to 1.25 percent yesterday, the lowest level since at least December 1998, according to data compiled by Bloomberg.
