BLBG:Euro Maintains Decline Against Yen Before Italy Auctions Government Debt
The euro maintained a two-day drop against the yen before Italy sells bills and bonds this week amid concern Europe’s debt crisis will drive up borrowing costs for the region’s larger economies.
The Dollar Index held losses from last week before U.S. reports forecast to show consumer confidence rose to the most since July and regional manufacturing gauges increased, reducing demand for haven assets. Australia’s currency ended a five-day rally as Asian stocks slid. Thailand’s baht weakened versus the greenback as investors reduced holdings of the nation’s assets.
“The markets are waiting to see how much demand there’ll be for Italian debt,” said Junichi Ishikawa, a Tokyo-based market analyst at IG Markets Securities Ltd. “If the results deepen doubts about Italy’s funding ability, they will weigh on the euro. I still don’t see any reason to buy the currency.”
The euro traded at 101.82 yen as of 12:06 p.m. in Tokyo from 101.84 yesterday. The 17-nation currency bought $1.3067 from $1.3061. The dollar was little changed at 77.93 yen. Australia’s currency fell 0.2 percent to $1.0149.
The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, was little changed at 79.883 and lost 0.2 percent last week. The MSCI Asia Pacific Index (MXAP) declined 0.2 percent.
Italy is scheduled to sell 9 billion euros ($11.8 billion) of 179-day bills and as much as 2.5 billion euros of zero-coupon 2013 bonds tomorrow. The nation will auction debt due in 2014, 2018, 2021 and 2022 the following day.
Ten-year bond yields in Italy advanced six basis points to 6.98 percent on Dec. 23, approaching the 7 percent level that spurred Greece, Ireland and Portugal to seek bailouts.
‘Stronger Than Expected’
The dollar has depreciated 1.1 percent in the past month, according to Bloomberg Correlation-Weighted Indexes, which tracks 10 developed-nation currencies.
“The U.S. economy is stronger than expected,” Ishikawa said. That’s supporting currencies such as the Aussie, he said.
An index of consumer confidence in the U.S. rose to 58.6 this month from 56 in November, according to the median estimate of economists surveyed by Bloomberg News. The New York-based Conference Board reports the figures today.
The Federal Reserve Bank of Richmond may say the overall business activity index for the central-Atlantic region climbed to 5 in December from 0 last month, a separate poll forecast. Manufacturing in Texas increased to 4.5 this month from 3.2 in November, another poll showed. Both Fed reports are due today.
‘Downside Risks’
The yen is set to advance versus most of its major peers this month as concern the crisis in Europe will damp global growth boosted demand for the currency as a refuge. The yen has gained against all 16 most-traded peers this year, strengthening 4.1 percent against the dollar and 6.6 percent versus the euro.
A “few” Bank of Japan board members “pointed to the possibility that downside risks to the economy had increased somewhat since the previous meeting” held in October, according to minutes of the Nov. 15-16 gathering published today in Tokyo.
Spain’s Economy and Competition Minister Luis de Guindos said yesterday in Madrid the nation has suffered a “relapse” and will contract as the People’s Party takes over the nation’s finances from the Socialists. “The next two quarters aren’t going to be easy,” he said.
German Growth Forecasts
Germany’s government is revising its forecast for 1 percent economic growth in 2012 and will present a lower figure in mid- January, Focus magazine reported, without citing anyone.
Germany’s economy ministry denied the Focus report, saying no decision has been made. An analysis of potential growth is still ongoing, a spokeswoman said in an e-mailed statement, declining to be identified citing ministry policy.
The yen tends to gain during periods of financial stress as Japan’s export-reliant economy doesn’t need foreign capital to balance current accounts -- the broadest measure of trade.
Thailand’s currency weakened for a third time in four days as overseas investors sold $3.8 million more of Thai stocks than they bought yesterday, bringing this year’s net sales to $200 million, according to exchange data.
The baht weakened 0.4 percent to 31.41 per dollar.
To contact the reporters on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
