SF: Yen, Dollar Advance as Global Slowdown Concern Boosts Demand
Aug. 24 (Bloomberg) -- The yen rose to a eight-week high against the euro and the dollar climbed to a six-week high versus the common currency as concern the global economy is slowing boosted demand for refuge assets.
The yen and dollar strengthened against most of their major counterparts before reports this week forecast to show the U.S. housing market is slowing and German business confidence dropped. The Australian dollar was near a one-month low against the yen after commodities and U.S. stocks declined, damping demand for growth-sensitive currencies.
"The U.S. is showing signs of slowdown," said Yoshiaki Ota, head of the foreign-exchange trading group in Tokyo at Sumitomo Mitsui Banking Corp., a unit of Japan's third-largest banking group. "Whenever we see negative numbers globally, risk aversion causes the dollar and yen to be bought."
The yen gained to 107.49 per euro at 9 a.m. in Tokyo from 107.79 in New York yesterday, after touching 107.43, the highest since June 29. Japan's currency is within 0.20 yen of an eight- year high against the euro.
The yen was little changed at 85.12 per dollar. Japan's currency touched 84.73 per dollar on Aug. 11, the most since July 1995. The dollar rose to $1.2640 per euro from $1.2657, after reaching $1.2624, the strongest since July 13.
Sales of U.S. existing homes dropped 13 percent to a 4.65 million annual rate in July, according to the median estimate of economists in a Bloomberg News survey ahead of the National Association of Realtors report today. U.S. new home sales held at an annual pace of 330,000 in July, according to another Bloomberg survey before tomorrow's data.
German Data
The Ifo institute's German business climate index dropped to 105.7 in August from 106.2 the previous month, a separate survey showed ahead of the data tomorrow.
The Reuters/Jefferies CRB Index of raw materials declined 0.4 percent yesterday, falling for a fourth day. The Standard & Poor's 500 Index and the Dow Jones Industrial Average fell 0.4 percent yesterday.
Australia's dollar fell to 75.66 yen from 75.90. It touched 75.48 yen on Aug. 20, the lowest since July 20. It declined to 88.93 U.S. cents from 89.13. New Zealand's currency slipped to 70.52 U.S. cents from 70.68. It weakened to 60.00 yen from 60.18.
The U.S. dollar climbed to as high as C$1.0545 against the Canadian currency from C$1.0522 yesterday, rising to the highest level since July 20.
