BLBG: Yen Strengthens to 15-Year High as Kan Wins; Franc, Gold Climb
By Stephen Kirkland
Sept. 14 (Bloomberg) -- The yen climbed to a 15-year high versus the dollar as Prime Minister Naoto Kan’s victory signaled Japan is less likely to weaken its currency. U.S. futures fell after the Standard & Poor’s 500 Index erased this year’s losses, gold rose and the Swiss franc reached parity with the dollar.
The yen appreciated against all of its 16 most-traded counterparts at 7:23 a.m. in New York and the franc strengthened to as much as 99.98 centimes per dollar, achieving parity for the first time since Dec. 4. The yield on the 10-year Treasury note lost 3 basis points to 2.72 percent. S&P 500 futures slipped 0.3 percent and the Stoxx Europe 600 Index sank 0.2 percent. Gold rallied to within 1 percent of a record.
Kan was re-elected head of the ruling Democratic Party of Japan, defeating Ichiro Ozawa, who said last week the nation may need to curb the yen’s gains. Investor confidence in Germany fell to a 19-month low in September, according to the ZEW Center for European Economic Research. U.S. retail sales probably rose 0.3 percent in August after a 0.4 percent gain a month earlier, economists surveyed by Bloomberg said before today’s report.
“Kan has shown a less aggressive stance than Ozawa on currency intervention,” said Kazuya Yashiro, a Tokyo-based foreign-exchange analyst at Himawari Securities Inc. “His victory will therefore give some opportunities to test the upside of the yen.”
The yen climbed 0.6 percent to 83.21 per dollar, after appreciating to 83.07, the strongest level since May 1995, and advanced 0.5 percent against the euro to 107.29. The franc was at 1.0019 per dollar, up 0.6 percent, and rose 0.4 percent to 1.2921 per euro.
U.K. Inflation
The pound declined as much as 0.5 percent against the dollar after a report showed U.K. inflation unexpectedly exceeded the government’s 3 percent limit for a sixth month in August. It was little changed versus the euro. New Zealand’s dollar slipped against all 16 of its most actively traded peers, losing 0.8 percent versus the dollar, after a report showed retail sales dropped for the first time in three months in July.
China’s yuan surged to the strongest level since 1993 on speculation the government will allow appreciation to head off U.S. trade sanctions as its economy improves. The currency gained 0.2 percent to 6.7463 per dollar and touched 6.7435, the strongest level since the central bank unified official and market exchange rates at the end of 1993.
The central bank fixed the reference rate at 6.7378 per dollar, the highest level since the dollar peg was scrapped in July 2005, before the U.S. House Ways and Means Committee discusses China’s currency policy tomorrow and Sept. 16.
Europe, Asia
The MSCI World Index of stocks in 24 developed nations slipped 0.1 percent, and the MSCI Emerging Market Index advanced for a fourth day, adding 0.1 percent. The MSCI Asia Pacific Index rose 0.2 percent. Utilities E.ON AG and RWE AG led declines in Europe, falling at least 2 percent, as they were downgraded by brokers. Royal Philips Electronics NV, the world’s biggest lighting company, tumbled 1.4 percent after setting earnings targets that disappointed investors.
The S&P 500 rallied 1.1 percent yesterday as Microsoft Corp. surged 5.3 percent after a person familiar with the matter said the company is planning to sell debt this year to pay for dividends and share repurchases because too much of its cash is held overseas.
The benchmark U.S. equity gauge has advanced for eight of the past nine sessions and is up 0.6 percent this year. Concern the economic recovery is faltering pushed the S&P 500 down 7.8 percent from its 2010 high in April and sent the index to 12 times forecast earnings over the next year, near the lowest since March 2009.
Gold Near Record
Gold for immediate delivery rose 0.9 percent to $1,256.95 an ounce as a decrease in the value of the dollar increased demand for precious metals. Gold’s all-time high is $1,265.30 an ounce reached on June 21. Palladium climbed 2 percent to $542.50 an ounce and silver gained as much as 1.5 percent to $20.19 an ounce, the most since March 2008.
Oil fell 0.7 percent to $76.63 in New York, near a one- month high, before a report forecast to show U.S. inventories declined while crews repaired a pipeline in the Midwest. Abdalla El-Badri, the secretary general of OPEC, said today on the organization’s 50th anniversary that prices of between $70 and $80 a barrel are comfortable for producers and consumers.
German 10-year bunds climbed, sending the yield down 4 basis points to 2.39 percent. Greece sold 1.17 billion euros ($1.5 billion) of 26-week Treasury bills, the Athens-based Public Debt Management Agency said. Investors bid for 4.54 times the securities offered, and the yield was 4.82 percent.
Credit-default swaps insuring Irish government debt rose 7 basis points to 372, near the highest level in 18 months, while contracts on Spain climbed 5 basis points to 223 and Italy increased 4 basis points to 193, according to data provider CMA.
To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net
