The dollar fell against the euro, snapping a six-day advance, as gains in Asian stocks damped demand for the refuge of the world’s primary reserve currency. The greenback declined against most major peers before a speech by Chicago Federal Reserve President Charles Evans and the release of the central bank’s Beige Book survey of economic conditions today. The yen appreciated versus the dollar as the Bank of Japan refrained from adding stimulus, curbing speculation it would follow moves by the Swiss National Bank to stem currency gains. The Australian dollar rose after a government report showed the nation’s economy expanded more than economists had forecast. “The dollar tends to weaken when appetite for risk increases because it’s a currency that’s preferred when people are risk-averse,” said Koji Fukaya, chief currency strategist in Tokyo at Credit Suisse Group AG. The dollar fell to $1.4058 per euro as of 6:16 a.m. in London from $1.3998 in New York yesterday when it advanced to $1.3972, the strongest since July 13. It slid to 77.21 yen from 77.66 yesterday, when it reached 77.73, a level unseen since Aug. 9. The yen strengthened to 108.54 per euro from 108.71. The MSCI Asia Pacific Index of regional shares advanced 2 percent. The Standard & Poor’s 500 Index pared losses in the last hour of trading yesterday to 0.7 percent from an earlier slide of 2.9 percent. Fed Policy Evans, a voting member of the Fed’s policy-making committee, is scheduled to speak in London today. Evans urged easier monetary policy and said he would “favor more accommodation” in a CNBC television interview on Aug. 30. The Fed will release its Beige Book assessment of economic conditions in each of its 12 U.S. districts later today. The Federal Open Market Committee will gather for a two-day meeting on Sept. 20 that was originally scheduled to last one day. “Because people are wondering if the U.S. will be okay in the medium to long term, they want to decrease dollar- denominated assets,” said Makoto Noji, a senior debt and currency strategist at SMBC Nikko Securities Inc. in Tokyo. “The U.S. will have to conduct monetary easing to bolster the economy, so these factors will drive the dollar down.” BOJ Decision The Bank of Japan kept its key interest rate between zero and 0.1 percent and left its credit and asset-purchase programs totaling 50 trillion yen ($647 billion) unchanged at the conclusion of a two-day policy meeting today. “The market was probably positioning itself pre-BOJ for the potential of some surprise action, given the activity that we saw from the SNB,” said Tim Riddell, head of global markets research for Asia at ANZ Banking Group Ltd. in Singapore. The Swiss central bank yesterday said “it will no longer tolerate a euro-franc exchange rate below the minimum rate of 1.20 francs” and that it’s “aiming for a substantial and sustained weakening of the franc.” The Swiss currency slid a record 9.9 percent against the euro after the announcement. Japan has intervened three times in the past 12 months to weaken its currency, with the last operation being a 4.51 trillion yen sale in August, the largest monthly amount since March 2004. The yen went on to reach 75.95 per dollar on Aug. 19, a postwar record. “Japan would prefer for now to be tactical, to retain the element of surprise, leave the markets guessing as to when they’re likely to intervene again,” Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney, Australia’s second-largest lender, said before today’s decision. “I think their next step is for another round of intervention when they think the conditions are ripe for success.” The yen and franc tend to strengthen during economic and financial turmoil because the export-reliant economies of Japan and Switzerland make them less dependent on foreign capital. A stronger currency hurts the competitiveness of exporters. Australian GDP The so-called Aussie gained against all of its 16 major counterparts after a report showed that gross domestic product expanded in the second quarter at a faster pace than economists had estimated and as Reserve Bank of Australia Governor Glenn Stevens signaled a willingness to keep interest rates unchanged at their current level. “The Aussie is holding its gains because the RBA was quite upbeat about the outlook for Australia,” said Annette Beacher, head of Asia-Pacific research at TD Securities. “That has been followed up pretty quickly by strong GDP.” Australia’s GDP expanded 1.2 percent in the second quarter from the previous quarter. That was above the 1 percent median estimate in a Bloomberg News survey of economists. “It is good to be in a position to be able to maintain steady settings” during periods of increased financial market anxiety, Stevens said in Perth today. The central bank yesterday kept its benchmark rate unchanged at 4.75 percent. Australia’s currency rose 1.2 percent to $1.0605 and strengthened to 81.86 yen from 81.42 yen. To contact the reporters on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net; Masaki Kondo in Singapore at mkondo3@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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