The yen traded near the highest in almost a week against the euro as signs the global economic recovery is waning damped demand for higher-yielding assets. Japan’s currency rose for a third day versus South Korea’s won after U.K. home sellers cut prices for the first time this year and economists said a U.S. report today will show builders turned the most pessimistic in four months. The New Zealand dollar fell for a second day against the greenback as traders cut bets on the amount of interest-rate increases the central bank will make as the growth outlook worsens. “There’s enough food for the bears to keep them in control at this point,” said Sean Callow, a senior foreign-exchange strategist in Sydney at Westpac Banking Corp., Australia’s second-largest lender. “There is some element of risk aversion supporting the yen and to a lesser extent the dollar.” The yen traded at 111.88 per euro as of 6:19 a.m. in London from 111.96 last week in New York, after climbing to 111.53, the strongest level since July 13. Japan’s currency gained 1 percent to 14.04 won. The dollar was at $1.2901 per euro from $1.2930, and bought 86.79 yen from 86.57 yen. New Zealand’s dollar weakened 0.5 percent to 70.69 U.S. cents. U.K. home asking prices fell 0.6 percent in July to 236,332 pounds ($362,000) and will drop 7 percent in the second half, Rightmove Plc said in a statement in London. The National Association of Home Builders/Wells Fargo confidence index in the U.S. declined to 16 in July, the least since March, according to a Bloomberg News survey before the report today. The yen and the dollar were also boosted as Asian stocks extended a worldwide slide in equities. The MSCI Asia Pacific excluding Japan Index declined 1.2 percent, the biggest loss in two weeks. Japan’s financial markets were shut for a holiday. New Zealand Dollar New Zealand’s currency weakened for a third day versus the yen after the Labor Department said the jobless rate is likely to “remain elevated” over coming quarters. Swaps traders lowered their expectations for rate increases by the Reserve Bank of New Zealand to 1.16 percentage points over the next 12 months, from 1.22 percentage points last week, according to a Credit Suisse AG index. “The market is starting to question whether we’re going to get more interest-rate rises out of New Zealand,” said Jim Vrondas, a manager in Sydney at OzForex Ltd., an online foreign- exchange dealer. “The slowing in the global economic environment and risk appetite, although it has weighed the Aussie down, it’s weighing on the kiwi more.” Australian Dollar Australia’s dollar dropped toward a one-week low after Prime Minister Julia Gillard called an election for Aug. 21, reinforcing speculation the central bank will refrain from raising interest rates next month. The so-called Aussie also declined before the central bank tomorrow releases minutes of a July 6 meeting when it said monetary policy was “appropriate,” pending further information on demand and prices. Australia’s statistics bureau will release consumer price data on July 28. “The RBA won’t raise rates on Aug. 3 during the election campaign,” said Alex Sinton, a senior dealer at ANZ National Bank Ltd. in Auckland. “If the RBA minutes tomorrow say they’re reasonably comfortable with where rates are, then I suspect even with an elevated CPI number, they won’t move early August. That’s likely to provide more weakness for the Aussie.” Australia’s currency weakened 0.2 percent to 86.74 cents after sliding to 86.34, the lowest since July 8. The currency traded at 75.17 yen from 75.21 yen. Hungarian Forint Hungary’s forint declined for a second day versus the dollar after the International Monetary Fund and European Union ended talks with Hungary’s government without endorsing Prime Minister Viktor Orban’s plans to curb the budget deficit. The IMF said in a July 17 statement it ended its review of Hungary’s 20 billion-euro ($25.8 billion) emergency bailout because “a range of issues remain open.” The Hungarian government must make “tough decisions, notably on spending,” to comply with deficit requirements, the European Union said. The statements are a blow to Orban’s efforts to rebuild investor confidence after ruling party officials raised the specter of a Greek-like crisis last month. The currency fell as low as 224.77 per dollar, the weakest since July 7, before trading at 224.22 from 218.18 last week. “The lack of agreement in talks with the IMF and EU is likely to further unsettle the Hungarian forint,” said Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney. “It could be a factor that keeps risk appetite low to start this week.” Threatening Exporters The euro’s biggest rally in a year is threatening exporters in Europe’s weakest economies as they grow more reliant on international sales for growth. The 8.6 percent gain to $1.2902 from a four-year low on June 7 reduced speculation the region’s debt crisis would break up the single currency. At the same time, the head of Spain’s Exporters Club says the stronger euro will make it harder to counter a “paralyzed” domestic market. European Aeronautic, Defence & Space Co., the maker of Airbus planes, says at $1.20, the currency still wouldn’t be weak. Salvatore Ferragamo SpA says it’s counting on exports to boost sales as austerity measures crimp demand. To contact the reporters on this story: Ron Harui in Singapore at rharui@bloomberg.net.

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