The yen and dollar strengthened against most major currencies as falling commodities prompted investors to unwind bets on higher-yielding assets. Australia’s dollar was among the worst performers versus the greenback as China raised banks’ reserve requirements to restrain prices, adding to the likelihood its growth will slow, and Standard & Poor’s GSCI Index of 24 raw materials fell for a second day. The Dollar Index climbed to the highest in three weeks as U.S. retail sales and producer prices rose in April. “The rising yen is a function of a risk-off move; from the end of April the carry trade wound up, and now is selling off,” said Jessica Hoversen, an analyst in New York at the futures broker MF Global Holdings Ltd. “The commodity currencies will trade weak today. We need to see some stability in the external environment before individuals feel comfortable taking on risk again.” The dollar gained 0.3 percent versus the euro to $1.4153 at 8:57 a.m. in New York, from $1.4192 yesterday. The yen rose 0.1 percent to 80.97 per dollar. Against the euro, the Japanese currency appreciated 0.4 percent to 114.64 yen, after reaching 114.19, the strongest since March 28. Norway’s krone rose versus most major peers, trading little changed versus the dollar at 5.5196, as the nation’s central bank raised interest rates. Global investors have tempered their optimism about the U.S. and world economies and plan to put more of their money in cash and less in commodities over the next six months, a Bloomberg survey found. Thirty percent of those questioned intend to reduce investments in commodities, according to a quarterly poll of 1,263 investors, analysts and traders. U.S. Retail Sales Retail sales increased 0.5 percent, compared with a median forecast in a Bloomberg News survey for a 0.6 percent gain, the Labor Department reported. The producer price index rose 0.8 percent, more than the 0.6 percent forecast in a separate Bloomberg survey. The number of Americans filing first-time claims for jobless benefits decreased 44,000 in the week ended May 7 to 434,000, Labor Department data showed. The median forecast was for a drop to 430,000. The Standard & Poor’s GSCI Index of 24 raw materials fell for a second day and crude oil futures dropped 2.1 percent. Oil declined after the International Energy Agency trimmed its 2011 global oil demand forecast for the first time as this year’s price rally begins to weigh on consumption. Futures on the Standard & Poor’s 500 Index of equities declined 0.5 percent. The Dollar Index rose 0.3 percent to 75.571 as the U.S. currency strengthened 0.7 percent versus the Australian dollar to $1.0623. ‘Risk Coming Off’ “With risk coming off, the dollar inevitably will see a reversal from some of the losses it’s had,” said Neil Mellor, a currency strategist at Bank of New York Mellon Corp. in London. “There are signs that perhaps the bubble that has formed in commodity prices is going to deflate, so all of these are coming together.” Reserve ratios will increase 0.5 percentage point from May 18, the People’s Bank of China said on its website today. The requirements currently stand at 20.5 percent for the biggest lenders. The Norwegian central bank increased its overnight deposit rate to 2.25 percent, from 2 percent. The euro slid to a five-week low against the greenback as European Union Economic and Monetary Affairs Commissioner Olli Rehn said a Greek debt restructuring would have “devastating implications.” Evaluation of Greece Officials from the EU, European Central Bank and International Monetary Fund yesterday began their fourth evaluation of Greece’s economy. Rehn said the delegation will need “a few weeks” to determine Greece’s financing needs and the potential size of any new aid package. “With so many comments coming out and so much uncertainty on Greece, the risks are to the downside at the moment,” said Chris Walker, a currency strategist at UBS AG in London. Australia’s dollar dropped for a second day as investors trimmed bets on central-bank rate increases after employment dropped by the most since 2009. The number of people employed in Australia declined by 22,100, following a 43,300 gain in March, the statistics bureau said. The jobless rate held at 4.9 percent. “With high fuel prices, a strong currency and concerns about taxation, you get the sense that this mixture of negatives is beginning to weigh on the manufacturing states,” said Robert Rennie, chief currency strategist in Sydney at Westpac Banking Corp. “Today’s data takes a bit of the shine and mystery off the Aussie dollar.” To contact the reporters on this story: Allison Bennett in New York at abennett23@bloomberg.net; Lucy Meakin in London at lmeakin1@bloomberg.net. To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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