BLBG: Yen Falls as Signs European Slump Easing Damp Safety Demand
The yen and dollar fell against most major counterparts on bets the European economy has seen the worst of its slump, sapping demand for a refuge.
The Japanese and U.S. currencies dropped for a second day against the euro after European economic confidence increased in April for the first time in 11 months. The dollar pared gains versus the yen as the U.S. economy contracted in the first quarter more than economists forecast.
“The confidence data from Europe is helping provide the euro with support,” said Ian Stannard, a foreign-exchange strategist in London at BNP Paribas SA, France’s largest bank.
The yen weakened 1.1 percent to 128.19 per euro at 8:35 a.m. in New York, from 126.79 yesterday. Japan’s currency slid 0.3 percent to 96.75 versus the dollar from 96.45. The dollar declined 0.8 percent to $1.3253 per euro from $1.3149.
The euro rose against the dollar and yen after an index of executive and consumer sentiment in the 16 nations that use the single currency increased to 67.2, the first increase since May 2008. The April reading was up from 64.7 in March.
U.S. Economy
The U.S. economy contracted at an annual rate of 6.1 percent in the first quarter, after shrinking 6.3 percent in the final three months of 2008, the Commerce Department reported today in Washington. The median forecast of 71 economists surveyed by Bloomberg was for a decrease of 4.7 percent.
The German economy, Europe’s biggest, will return to growth next year after its steepest decline since World War II, the government said today in an e-mailed statement. The economy will grow 0.5 percent in 2010 after contracting 6 percent this year, the government said.
The Federal Reserve will keep its target lending rate in a range of zero to 0.25 percent at today’s conclusion of a two-day meeting, a separate Bloomberg survey showed. Policy makers will announce their decision at 2:15 p.m. in Washington.
The pound gained 0.8 percent to $1.4756 and 1.3 percent to 142.95 yen as better-than-expected earnings spurred gains in stock markets.
“Equity markets and stock futures are in positive territory,” said Masashi Kurabe, head of currency sales and trading at Bank of Tokyo-Mitsubishi UFJ Ltd. in Hong Kong. “This is causing selling of the yen.”
Stock Gains
The Dow Jones Stoxx 600 Index added 1.1 percent, while the FTSE 100 Index of U.K. stocks gained 1.1 percent. Futures on the Standard & Poor’s 500 Index were 1.1 percent higher. The MSCI World Index rose 0.7 percent.
Operating profit at Siemens AG’s industry, energy and health-care units, referred to as “sector profit,” climbed to 1.84 billion euros ($2.43 billion) from 1.29 billion euros, the Munich-based company said today. Analysts in a Bloomberg survey predicted 1.65 billion euros.
DreamWorks Animation SKG Inc., the maker of ‘Shrek’ movies, said first-quarter profit more than doubled on theatrical and home-video sales from “Madagascar: Escape 2 Africa.”
Japan’s currency fell for the first time in nine days versus the South Korean won after the Bank of Korea said the current-account surplus, the broadest measure of trade, swelled to $6.65 billion last month, almost doubling from February. New Zealand’s exports surged 17 percent from the prior month, the first back-to-back increase since December 2007, the statistics bureau said.
“Overall the data are slightly more positive,” said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. “This is weighing on the yen and the dollar.”
