The yen fell to the weakest level in almost nine months versus the dollar amid speculation Japanese opposition leader Shinzo Abe, an advocate of unlimited monetary easing, will win weekend elections.
The yen also slid before the Bank of Japan (8301)’s Tankan survey, which economists said will show pessimism among manufacturers grew. The dollar rose for the first time in four days against the euro after Federal Reserve Chairman Ben S. Bernanke said the central bank’s latest stimulus measures won’t offset the effects of the fiscal cliff, boosting demand for the safety of the greenback. The franc climbed versus the euro after the Swiss National Bank maintained its cap against the shared currency.
“The market is pricing in a poor Tankan, an Abe majority and further BOJ stimulus, which all point to a weaker yen,” said Neil Jones, head of European hedge-fund sales at Mizuho Corporate Bank Ltd. in London. “If there is no deal in the U.S. then there is major risk of a substantial selloff in risk assets. The euro would come off substantially.”
The yen dropped 0.2 percent to 83.39 per dollar at 6:18 a.m. New York time after touching 83.67, the weakest since March 21. It was little changed at 108.91 per euro after depreciating to 109.54, the least since April 4. The dollar gained 0.1 percent to $1.3057 per euro.
The Swiss currency was 0.1 percent stronger at 1.2096 per euro.
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To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
