BLBG: Yen Trades Near Lowest Since May Against Euro Before Germany Jobs Report
The yen traded within 0.5 percent of a 10-month low against the euro before reports that economists said will show labor markets in Germany and the U.S. improved, sapping demand for safer assets.
Japan’s currency headed for a quarterly drop as Asian stocks rose and a government report showed the nation’s investors bought the most foreign bonds in six months. Australia’s dollar touched a record after retail sales grew more than estimated, outweighing an unexpected drop in building approvals. South Korea’s won strengthened as signs the U.S. recovery is gaining momentum brightened the outlook for exports.
“We suspect the backdrop of buoyant risk appetite and upbeat equity market sentiment will keep safe-haven currencies like the yen under downward pressure,” said Mike Jones, a foreign-exchange strategist at Bank of New Zealand Ltd. in Wellington. “Widening interest-rate differentials are also weighing on the yen.”
The yen traded at 116.96 per euro as of 12:39 p.m. in Tokyo from 117.10 in New York yesterday after falling to 117.54, the lowest since May 13. Japan’s currency traded at 82.83 per dollar from 82.89 after dropping to 83.21, the weakest since March 11 when Japan was struck by a magnitude-9.0 earthquake. The euro bought $1.4134 from $1.4127.
Quarterly Drop
Japan’s currency fell 5.9 percent in the past three months, the second-biggest decline among the 10 most-widely traded currencies tracked by Bloomberg Correlation-Weighted Indexes. The MSCI Asia Pacific Index of shares rose 0.1 percent after the Standard & Poor’s 500 Index advanced 0.7 percent yesterday.
Germany’s unemployment rate dropped to 7.2 percent in March, the lowest since Bloomberg started compiling the data in December 1991, according a Bloomberg survey before today’s report. Claims for initial unemployment benefits in the U.S. fell for a third week, another survey of economists showed ahead of the Labor Department data today.
Japanese investors bought 973.3 billion yen ($11.8 billion) more overseas bonds and notes than they sold last week, the most since September, Ministry of Finance data showed today.
The euro held onto yesterday’s gain against the yen on speculation the European Central Bank will raise interest rates at its next meeting. The ECB will increase its main refinancing rate by a quarter-percentage point to 1.25 percent on April 7, according to economists.
‘Buy the Rumor’
“The euro is likely to be strong,” said Yuji Saito, director of the foreign-exchange department at Credit Agricole Corporate and Investment Bank in Tokyo. “It’s buy the rumor and sell the fact until the ECB’s meeting.”
The Australian dollar headed headed for a third quarterly gain after a government report showed retail sales increased in February by more than economists forecast.
Sales rose 0.5 percent last month, the Bureau of Statistics said today, surpassing the 0.4 percent increase projected by economists. The number of permits granted to build or renovate houses and apartments dropped 7.4 percent, while economists had estimated a 4 percent increase.
“We expect households to reverse recent outsized precautionary saving as the year unfolds and heading into 2012,” Annette Beacher, head of Asia-Pacific research at TD Securities in Singapore, wrote in a report. “The strong data pushed the Australian dollar to another fresh post-float high.”
The Aussie traded at $1.0323 from $1.0329 yesterday after rising to $1.0347, the strongest since the currency was freely floated in 1983. The currency was at 85.53 yen from 85.62 yen after earlier reaching 86.01, the highest since May 5.
Korean Won
The won rose against all of its 16 major counterparts, as the Kospi Index (KOSPI) of South Korean shares reached the highest level in seven weeks.
“Anticipation for an economic recovery in the U.S. and elsewhere is prompting foreigners to buy more stocks, supporting the won,” said Yun Se Min, a foreign-exchange dealer at Busan Bank in Seoul.
The won rose 0.3 percent to 1,101.13 per dollar from 1,104.10 after climbing to 1,100.15, the strongest level since September 2008.
Losses in the yen were tempered on speculation Japanese companies purchased the currency to repatriate overseas earnings on the last day of the nation’s fiscal year.
“Exporters are buying the yen” after the currency touched a two-week low against the dollar, said Takashi Kudo, general manager of market information services in Tokyo at NTT SmartTrade Inc., a unit of Japan’s biggest phone company.
Japan’s large manufacturers expect the yen to average 86.47 per dollar in the year to March 31, according to the Bank of Japan’s latest Tankan business-confidence survey on Dec. 15. That’s the strongest level since the currency forecast was included in the report in 1996.
To contact the reporters on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.
