BLBG:Yen Drops on Speculation BOJ Will Add Easing Measures
The euro strengthened from a six- week low against the yen as Spain’s bonds rose for the first time in six days before Prime Minister Mariano Rajoy addresses lawmakers on the nation’s deficit.
Europe’s shared currency advanced against the dollar before Italy sells 11 billion euros ($14.4 billion) of 91- and 361 day bills today and longer-term debt tomorrow. The yen weakened against all but one of its 16 major peers as the Bank of Japan (8301)’s policy inaction yesterday fueled speculation it will add to monetary easing later this month.
“Spanish 10-year yields are falling and that’s providing a little bit of support for the euro,” said Jeremy Stretch, head of currency strategy at Canadian Imperial Bank of Commerce in London. “It will probably be short-lived. There are concerns about implementation risk in Italy, Greece and Spain and the Italian issuance today and tomorrow will be watched by markets with a great deal of interest.”
The euro advanced 0.4 percent to 105.96 yen at 8:21 a.m. London time, after falling to 105.45 yen, the weakest since Feb. 22. Europe’s shared currency rose 0.3 percent to $1.3118, after reaching $1.3033 on April 9, the lowest since March 15. The yen was little changed at 80.76 per dollar.
The euro will probably weaken to $1.26 by June, Stretch said.
Spain’s 10-year yields fell six basis points to 5.92 percent today, after touching 6.02 percent, the most since Dec. 12. Economy Minister Luis de Guindos declined to rule out a rescue for Spain and central bank Governor Miguel Angel Fernandez Ordonez said the nation’s lenders may need additional capital if the economy weakens more than expected.
Should the euro break below $1.3033 it may weaken to $1.2975, Ralf Umlauf, head of floor research at Helaba Landesbank Hessen-Thueringen in Frankfurt, wrote in a note to investors.
To contact the reporters on this story: Emma Charlton in London at echarlton1@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net.
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.
