BLBG:Yen, Dollar Drop as Stock Gains, U.S. Growth Damp Demand for Haven Assets
The yen fell to a three-month low against the dollar as stocks advanced and signs of growth in the U.S. economy damped demand for haven assets.
The dollar declined against higher-yielding peers before the release of an index of U.S. leading indicators that’s forecast to show a fourth month of gains. Norway’s krone rose even after its central bank said it is monitoring the currency. The euro headed for a weekly decline against 13 of its 16 major counterparts as Greece struggled to seal a second bailout, with the region’s finance ministers set to meet Feb. 20.
“Stock markets are higher,” said Lee Wai Tuck, a strategist at Forecast Pte in Singapore. “I will not be too bearish on the yen, but at the moment investors are selling.”
Japan’s currency slipped 0.1 percent to 79.01 yen per dollar at 9:09 a.m. London time. The yen was little changed at 103.81 per euro and the greenback traded little changed at $1.3137 per euro.
The yen earlier touched 79.18 per dollar, the weakest since Oct. 31, when the currency set a postwar record at 75.35, prompting currency-market intervention by Japan.
The MSCI Asia Pacific Index of stocks rose 1.4 percent and the Stoxx Europe 600 Index climbed 0.5 percent.
U.S. Outlook
The Conference Board’s gauge of the U.S. outlook for the next three to six months increased 0.5 percent in January after climbing 0.4 percent in December, the New York-based group is predicted to say today, according to a Bloomberg News survey of economists.
The cost of living in the U.S. climbed 0.3 percent last month from December, economists projected before today’s Labor Department report. Prices excluding volatile food and energy costs, the so-called core index, probably increased 0.2 percent after a 0.1 percent rise a month earlier, another Bloomberg survey showed.
“In the short term, it’s very clear to us that there is momentum in the U.S. economy,” said Robert Rennie, the Sydney- based chief currency strategist at Westpac Banking Corp. Investors are taking “any opportunity that they have to buy risk and sell dollars.”
New Zealand’s dollar rose 0.4 percent to 83.64 U.S. cents, set for a 1.2 percent weekly gain. Australia’s dollar traded at $1.0768 from $1.0755 yesterday and $1.0673 on Feb. 10.
Greek Bond Swap
The dollar has fallen 3 percent in the past month, the worst performance after the yen’s 6 percent decline among 10 developed market currencies tracked by Bloomberg Correlation- Weighted Indexes. The euro has gained 0.3 percent in the same period.
Euro-region finance ministers will convene in Brussels on Feb. 20 to discuss a second bailout for Greece that includes a debt-swap agreement. The European Central Bank is exchanging its Greek bonds for new ones to ensure it isn’t forced to take losses in a debt restructuring, three euro-area officials said.
The potential move by the ECB may weaken the euro as it implies the central bank has a senior status over other investors, according to UBS AG. “The risk of a voluntary restructuring morphing into a coercive one has arguably increased significantly,” Chris Walker, a foreign-exchange strategist in London, wrote in a research report today.
European Manufacturing
The 17-nation currency headed for a weekly decline against the dollar. A euro-area index based on a survey of purchasing managers in the manufacturing industry will probably be 49.3 in February compared with 48.8 last month, London-based Markit Economics is predicted to say on Feb. 22, according to a Bloomberg poll of economists. That would be the seventh-straight month below the 50 level that separates contraction from expansion.
“Probably the biggest concern is the widening divergence between the stronger core countries and the periphery,” said Greg Gibbs, a foreign-exchange strategist at Royal Bank of Scotland Group Plc in Sydney. “The overall risk of some kind of re-emergence in the crisis over the next year remains very high, in which case there’s still downside potential for the euro.”
The Norwegian krone rose against the dollar and euro even after the central bank said it’s ready to act should the currency’s appreciation warrant a response.
“We have room to maneuver; our interest rate is not zero,” Governor Oeystein Olsen said in an interview in Oslo yesterday.
The krone strengthened 0.4 percent to 5.7092 per dollar and gained 0.3 percent to 7.4995 per euro.
To contact the reporters on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net; Kristine Aquino in Singapore at kaquino1@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
