BLBG: Yen Falls for Third Day as Stocks Gain on Recovery Signs; Euro Strengthens
The yen weakened for a third day against the euro as Asian stocks rallied on signs the global recovery is regaining momentum, sapping demand for Japan’s currency as a refuge.
The yen fell the most versus the so-called Aussie and the South Korean won after an Australian report showed employers added three times more jobs than economists forecast and the International Monetary Fund raised its global growth forecast. The euro strengthened to a seven-week high versus the dollar after people familiar said European regulators were assuming smaller losses from Greek government bonds than some investors had anticipated from stress tests on banks.
“Risk-taking appetite is improving as Asia’s economic rebound appears robust,” said Yoh Nihei, Tokyo-based trading group manager at Tokai Tokyo Securities Co. “The bias is for the yen and the dollar to be sold.”
Japan’s currency fell to 111.82 per euro as of 6:32 a.m. in London from 110.84 in New York yesterday, after dropping to 112.01, the lowest since June 22. The yen slipped 0.7 percent to 88.34 per dollar from 87.70, after declining to 88.46, the weakest since July 1. It slid 1.7 percent to 77.09 per Australian dollar, and 1.7 percent to 13.70733 won.
The euro rose to $1.2661 from $1.2638, and the Swiss franc advanced to 1.0482 per dollar, the strongest since April 1, before trading at 1.0512 from 1.0517.
Asian Stocks
The yen fell versus all 16 of its major counterparts as the MSCI Asia Pacific Index of shares rallied 1.7 percent, the third gain in four days.
“Improved investor risk appetite tended to weigh on the ‘safe haven’ currencies such as the dollar and yen,” John Kyriakopoulos, head of foreign-exchange strategy in Sydney at National Australia Bank Ltd., wrote in a note to clients today.
Australia’s dollar rose for a third day after the statistics bureau said employers added workers in June for a fourth month.
The number of people employed increased by 45,900, after rising a revised 22,800 in May, the bureau said in Sydney. Economists forecast a gain of 15,000, according to a Bloomberg News survey.
The IMF said in its World Economic Outlook released today that the world economy will expand 4.6 percent in 2010, the most since 2007, compared with an April projection of 4.2 percent.
Euro Gains
The euro climbed to a two-week high against the yen on speculation stress tests for European banks will ease concerns about the health of the region’s financial system.
European regulators have told lenders their planned tests may assume a loss of about 17 percent on Greek debt and 3 percent on Spanish bonds, according to two people briefed on the talks. Credit markets are pricing in losses of about 60 percent on Greek bonds should the government default.
“What the stress-test results might do is help to calm investor nerves,” said Khoon Goh, senior market economist at ANZ National Bank Ltd. in Wellington. “Investors are starting to reduce exposure in dollars and diversify into euros.”
The European Central Bank will leave its benchmark interest rate unchanged at 1 percent at a policy meeting today, according to all 55 economists surveyed by Bloomberg. ECB President Jean- Claude Trichet will hold a media briefing after the meeting.
‘More Confident’
“We expect a somewhat more confident Trichet, which should be positive for the euro,” Dariusz Kowalczyk, a strategist at Credit Agricole CIB in Hong Kong, wrote in a note today.
The won strengthened the most in nearly two weeks after a report indicating that U.S. consumers are spending more freely damped concern exports will cool.
The International Council of Shopping Centers estimated retailers’ sales in the world’s biggest economy expanded at an average monthly rate of 4 percent in the five months through June, the fastest pace in four years.
“The positive numbers from U.S. retailers’ sales may help risk sentiment,” said Ko Yun Jin, a currency dealer at Kookmin Bank in Seoul. “But it’s difficult to pin down the environment and say it is risk-on or risk-off. We’re stuck in a range of 1,200 to 1,250 against the dollar.”
The won rose 1 percent to 1,210.60 per dollar, the biggest gain since June 28.
To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net.
