BLBG:Yen Gains Versus Peers as Stock Drop Boosts Refuge Demand
The yen gained versus all of its major counterparts as investors flocked to refuge assets amid a decline in Asian equities.
The euro held near a one-month high against the dollar before a meeting this week where European finance ministers are expected to agree to bolster the region’s debt-crisis firewall. The greenback strengthened against the Australian and New Zealand dollars before a report forecast to show U.S. orders for durable goods rose last month, reducing the case for further monetary easing by the Federal Reserve.
“U.S. stocks fell and Asian stocks are a bit lower,” said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. “If the stock market were to come under further pressure, then you’ll likely see Aussie down against the yen, euro down against the yen.”
The yen added 0.3 percent to 82.95 per dollar as of 6:45 a.m. in London. It strengthened 0.2 percent to 110.58 per euro from 110.75. The 17-nation euro added 0.1 percent to $1.3330 after climbing to $1.3386 yesterday, the highest since Feb. 29. Australia’s dollar weakened 0.2 percent to $1.0436 and New Zealand’s lost 0.2 percent to 81.93 U.S. cents.
The MSCI Asia Pacific Index (MXAP) of stocks fell 0.5 percent. The Standard & Poor’s 500 Index dropped 0.3 yesterday, while the Stoxx Europe 600 Index declined 0.5 percent.
Fiscal Year-End
The yen strengthened amid speculation Japanese companies will repatriate overseas earnings before the end of the fiscal year on March 31.
“The yen move is driven by supply and demand before the final exchange-rate fixing of the fiscal year,” said Michiyoshi Kato, senior vice president of foreign-currency sales in Tokyo at Mizuho Corporate Bank Ltd., a unit of Japan’s second-largest bank by assets. “While there haven’t been a whole lot of orders from Japanese exporters to sell the dollar into the end of March, I think we’ll start to see some rise in demand to buy the yen. The Aussie dollar is being sold against the yen.”
Major Japanese banks announce the yen fixing rate at 10 a.m. in Tokyo each day to their customers, based on the spot market at 9:55 a.m.
Demand for the 17-nation euro was supported before euro- area finance ministers meet on March 30 in Copenhagen on speculation they will discuss the prospect of combining the temporary European Financial Stability Facility and its permanent successor from July, the European Stability Mechanism.
German Backing Possible
German Chancellor Angela Merkel said March 26 her country may back plans for Europe’s temporary and permanent rescue funds to run in parallel.
“For the moment, the market is happy to hold the euro at relatively high levels on the basis that there’s not going to be an absolute financial crisis emanating from Europe,” said Derek Mumford, a director in Sydney at Rochford Capital, a currency- risk management company. “Perhaps patience over the coming month will be tested.”
The euro has risen 0.4 percent this year according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The yen has fallen 10 percent, while the dollar has depreciated 2.6 percent.
Losses in the dollar were limited before a report that economists in a Bloomberg survey estimated will show orders for long-lasting factory goods in the U.S. rose 3 percent last month after decreasing 3.7 percent in January. The Commerce Department will release the figures today.
Durable Goods Orders
“The risk is that durable goods orders is going to be even stronger than economists predict and that will push the U.S. dollar higher,” said Joseph Capurso, a currency strategist in Sydney at Commonwealth Bank of Australia. (CBA)
The British pound may fall to $1.3255, the least since 1985, as the U.K currency approaches its 200-week moving average of $1.6014, a technical indicator last breached in August 2008, Citigroup Inc. said, citing trading patterns.
The moving average, coupled with a trend line dating back to 2007 and the currency pair’s February high, may stop the pound’s momentum and potentially push it back to a level not seen in more than a quarter century, according to Jim Zhou, an analyst at the Citigroup Global Markets unit in New York.
The pound was little changed against the dollar at $1.5959, after touching $1.6001 yesterday, the most this year.
To contact the reporters on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net; Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
