The yen and dollar headed for their biggest weekly declines against the euro in more than a month as signs the U.S. economy is picking up damped demand for haven currencies.
The dollar was set to weaken versus 15 of its 16 major peers this week before data forecast to show the pace of hiring quickened. The yen fell for a third day against the euro as Japanese Finance Minister Jun Azumi said he’ll take action on speculative currency moves. Gains in the euro were limited before German Chancellor Angela Merkel outlines her stance on stemming the region’s debt crisis ahead of a Dec. 9 summit.
“If U.S. employment data are good, stocks are likely to rise, pushing down the dollar,” said Toshiya Yamauchi, a senior currency analyst in Tokyo at Ueda Harlow Ltd., which provides foreign-exchange margin-trading services. “The yen may be sold the most against major currencies.”
The yen fell 0.1 percent to 104.71 per euro as of 2:45 p.m. in Tokyo from 104.60 in New York yesterday. It has fallen 1.7 percent in the past five days, set for the biggest weekly drop since Oct. 14. The Japanese currency lost 0.1 percent to 77.80 per dollar.
The greenback was little changed at $1.3459 per euro, set for a 1.7 percent drop since Nov. 25, the first five-day decline in five weeks.
Payrolls in the U.S. climbed by 125,000 workers in November after rising 80,000 the previous month, according to the median forecast of economists in a Bloomberg News survey. The Labor Department data is due for release today.
‘Few Bright Spots’
The Institute for Supply Management said yesterday its gauge for U.S. manufacturing rose to 52.7 in November, the most in five months, exceeding the median estimate of 51.8 in a separate Bloomberg survey. Readings above 50 indicate expansion.
“We’re actually seeing the U.S. economy being one of the few bright spots out there,” said Robert Rennie, Sydney-based chief currency strategist at Westpac Banking Corp., Australia’s second-largest lender. “Better U.S. data is in the short term a modest negative for the U.S. dollar.”
The U.S. currency has gained 5.9 percent in the past six months, the second-best performance after the yen among the 10 developed-nation currencies tracked by the Bloomberg Correlation-Weighted Indexes. The euro has fallen 2.1 percent.
The yen reached a postwar record of 75.35 per dollar on Oct. 31, prompting Japan to intervene in markets for the third time this year to stem gains that endanger an export-led economic recovery. It sold 9.09 trillion yen ($117 billion) from Oct. 28 to Nov. 28, the Ministry of Finance said this week, the most ever on a monthly basis in data going back to 1991.
‘Surreptitious’ Intervention
Azumi declined to comment today on whether authorities have been selling yen since Oct. 31.
“Given the massive intervention on Oct. 31 and possible surreptitious intervention thereafter, I think the market is paying a little bit more of attention now,” said Callum Henderson, global head of foreign-exchange research in Singapore at Standard Chartered Plc.
European Central Bank policy makers will meet on Dec. 8 for a rate decision. All but one of the 33 economists in a Bloomberg survey predict the ECB will cut borrowing costs by at least 25 basis points from the current 1.25 percent. The central bank unexpectedly lowered the key rate at its November meeting.
“On a three-month view, I’m looking lower for the euro because we’re seeing weak growth and easier policy” in Europe, said Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney. “The euro is not going to collapse, but I think it can edge lower.”
In the days before her speech today to German lawmakers, Merkel has repeated her push to rework European Union rules to lock in budget monitoring and enforcement and seal off the ECB from political pressure.
Commonwealth Bank of Australia cut its forecast on the euro today to $1.27 from $1.44 by the end of June 2012, saying the euro-area economy is likely to enter a mild recession.
To contact the reporters on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Kristine Aquino in Singapore at kaquino1@bloomberg.net.
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.
