BLBG:Yen Falls for Third Day Versus Euro on Stock Gains, U.S. Growth Outlook
The yen weakened for a third day against the euro as stocks advanced around the world amid signs the U.S. economy is gathering momentum, reducing demand for safer assets.
The dollar headed for its first weekly decline in a month versus Europe’s currency before a U.S. report that economists said will show the pace of hiring quickened in November. The yen fell against all but one of its 16 major counterparts as Japan’s Finance Minister Jun Azumi said he’ll take action on speculative currency moves. Gains in the euro were tempered as German Chancellor Angela Merkel said overcoming the sovereign debt crisis “will take years.”
“Recent U.S. data have been slightly more optimistic than what has been factored into the market,” said Neil Jones, head of European hedge-fund sales at Mizuho Corporate Bank Ltd. in London. “That’s helping risk and weighing on safe-haven currencies such as the dollar and yen. The market is in the process of reducing its risk-off positions.”
The yen fell 0.4 percent to 105 per euro at 10:38 a.m. in London, extending this week’s decline to 2 percent, the most since the period ended Oct. 14. The dollar dropped 0.2 percent to $1.3481 per euro, having depreciated 1.8 percent this week, also the most since Oct. 14. The yen weakened 0.2 percent to 77.88 per dollar.
U.S. Payrolls
U.S. employers hired 125,000 workers in November after adding 80,000 the previous month, according to a Bloomberg survey before today’s Labor Department data. The Institute for Supply Management said yesterday its gauge of manufacturing rose to 52.7 in November, the most in five months. Readings above 50 indicate growth.
“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 Stoxx Europe 600 Index gained 1.3 percent, and futures on the Standard & Poor’s 500 Index expiring in December advanced 1.1 percent.
The U.S. currency has strengthened 5.6 percent in the past six months, the second-best performer after the yen among 10 developed-nation currencies tracked by the Bloomberg Correlation-Weighted Indexes. The yen has risen 8.4 percent and the euro has fallen 2.1 percent.
The yen climbed to 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 endangered an export-led economic recovery. The nation sold 9.09 trillion yen from Oct. 28 to Nov. 28, the Ministry of Finance said this week, the most on a monthly basis in data going back to 1991.
‘Massive Intervention’
“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.
Japan’s Trade and Industry Minister Yukio Edano said today he doubts the strong yen reflects the country’s economic fundamentals. His comments came after a government report showed capital spending in the world’s third-largest economy fell 9.8 percent from a year earlier in the three months ended September 30, the biggest drop since the quarter ended March 2010.
No Easy Solution
Merkel likened solving Europe’s debt crisis to a marathon as she rejected joint euro-area bonds and central bank action while pushing for closer economic ties and tougher budget enforcement.
“The government has always made it clear that the debt crisis can’t be solved at a single stroke and there are no easy and fast solutions,” she said in a speech today in the lower house of parliament. European leaders are scheduled to meet for a summit in Brussels on Dec. 9.
The euro stayed higher against the dollar and yen after a report showed European producer-price inflation slowed in October. Wholesale prices in the euro region rose 5.5 percent from a year earlier after increasing 5.8 percent in September, the European Union’s statistics office said. That’s the slowest since December 2010.
ECB policy makers will meet on Dec. 8 to review interest rates. All but one of the 33 economists in a Bloomberg survey predict the central bank will cut borrowing costs by at least 25 basis points from the current 1.25 percent. The ECB 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.”
To contact the reporters on this story: Keith Jenkins in London at Kjenkins3@bloomberg.net; Masaki Kondo in Singapore at mkondo3@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
