The dollar, yen and Swiss franc weakened against most of their major counterparts after reports showed manufacturing from China to Europe exceeded economists’ forecasts, reducing demand for safer assets. Sweden’s krona and the New Zealand dollar led gains versus the greenback as demand for higher-yielding assets boosted Asian and European stocks. The euro advanced for a third day versus the yen after gauges of German and euro-area manufacturing beat estimates. Japan’s Finance Minister Yoshihiko Noda said gains in the yen may hurt the nation’s recovery, fueling speculation officials will act to curb its recent appreciation. “The market’s perception seems to be changing on a daily basis but we’re definitely seeing a move into riskier currencies and asset classes,” said Chris Huddleston, a trader at Investec Bank Plc in London. “The general feeling seems to be that there’s slightly less potential for another global recession and the dollar in particular is being sold against anything that’s higher-yielding.” The dollar weakened 0.9 percent to $1.4485 per euro as of 6:43 a.m. in New York, and declined 0.3 percent to 76.57 yen. Sweden’s krona rallied 1.2 percent to 6.2958 per dollar, and New Zealand’s currency gained 1 percent to 83.24 U.S. cents. The euro appreciated 0.5 percent to 110.82 yen, and added 0.6 percent to 1.1417 to the Swiss franc. Stock Gains The Stoxx Europe 600 Index added 1.4 percent and futures on the Standard & Poor’s 500 Index gained 1.4 percent as the better-than-estimated factory data helped ease concerns the global economy is slowing. Higher-yielding assets also rose amid speculation the Federal Reserve will this week announce further monetary stimulus to bolster the U.S. economy. Fed Chairman Ben S. Bernanke is scheduled to speak on Aug. 26 in Jackson Hole, Wyoming, amid speculation he will signal additional government debt purchases to support growth, a measure known as quantitative easing, or QE. A preliminary gauge of Chinese manufacturing in August was 49.8, according to a reading of the Purchasing Managers’ Index reported by HSBC Holdings Plc and Markit Economics today. The figure was better than the “rumored” number of 45 and may provide some relief to the market, Bank of America Merrill Lynch’s Ting Lu said. A number below 50 shows a contraction. Germany’s manufacturing purchasing managers’ index was 52 in August, exceeding the 50.6 median forecast in a Bloomberg survey, Markit Economics said separately today. A composite index of euro-area purchasing managers in services and manufacturing also exceeded estimates. Confidence Falls Gains in the euro were tempered after the so-called ZEW report showed German investor confidence slumped this month. The ZEW Center for European Economic Research said its index of investor and analyst expectations, which aims to predict developments six months in advance, fell to minus 37.6 from minus 15.1 in July. Economists forecast a decline to minus 26, according to a Bloomberg survey. “The ZEW data was disappointing but it’s a much less important number than the PMI data which was fairly good,” said Geoff Kendrick, head of European currency strategy at Nomura International Plc in London. “We’re also getting pretty close to the Bernanke speech and some people are beginning to marginally price in the chance of further QE. That’s playing out in the form of stronger equities and a weaker dollar.” The dollar may weaken to about $1.47 per euro before the Fed chairman’s speech, said Kendrick who predicts no additional bond purchases. The U.S. currency may recover should Bernanke announce alternative measures to boost the economy while avoiding further government debt purchases, Kendrick said. ‘Big Focus’ “A big focus for the market this week will be what Bernanke says at Jackson Hole,” said You-na Park, a currency strategist at Commerzbank AG in Frankfurt. Japan’s yen fell against 13 of its 16 major counterparts after Finance Minister Noda said he is examining how much speculative trading is influencing the currency, which surged to a post-World War II record of 75.95 per dollar on Aug. 19. Measures to address the yen may be needed in the government’s budget, Noda added. “There is a little bit of fear in the market for an intervention from the Bank of Japan,” said Tsutomu Soma, a bond and currency dealer in Tokyo at Okasan Securities Co. “Investors can’t aggressively buy the yen now as much as they want because some big events are ahead, such as Bernanke’s speech and the leadership election for the ruling party.” Prime Minister Naoto Kan told his cabinet today that he will resign after the passage of legislation including a deficit-covering bond bill, Kyodo News reported, without saying where it got the information. Kan said a new prime minister will probably be decided on Aug. 30, according to the report. Switzerland’s exports, adjusted for seasonal swings and inflation, fell 3 percent in July from the previous month, the Federal Customs Office said today. Imports rose 0.1 percent. The franc has risen 18 percent in the past 12 months against a basket of its nine major developed-market peers, Bloomberg Correlation Weighted Currency Indexes Show. To contact the reporter on this story: Garth Theunissen in London gtheunissen@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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