BLBG:Dollar Rises to 3 1/2-Year High Versus Yen on Jobs, Japan Trade
The dollar advanced to the highest level in 3 1/2 years versus the yen on speculation an improving labor market will compel the Federal Reserve to slow stimulus even as Japan pledges to extend easing policies.
Demand for the dollar increased before a report that may show U.S. employers added more jobs in February. The yen is set to decline this week against its 16 major peers as data showed Japan had a current account deficit for a third-straight month. The Australian and New Zealand dollars fell after a report showed a bigger-than-expected decline in imports for China, the South Pacific nations’ biggest trading partner.
“The greater the momentum in the U.S. economy, the sooner the Fed will taper off QE and the higher the U.S. yields will rise,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. (WBC) in Sydney, referring to the Fed’s asset purchase program known as quantitative easing. “Dollar-yen is a preferred tool for dollar bulls at the moment.”
The dollar rose 0.5 percent to 95.28 yen as of 6:56 a.m. in London, after reaching 95.45, the most since August 2009. It rose 0.2 percent to at $1.3085 per euro. The euro climbed 0.3 percent to 124.68 yen.
The yen has dropped 1.8 percent against the dollar since March 1, falling for a second week, and weakened 2.3 percent against the euro. Europe’s 17-nation currency added 0.5 percent versus the greenback, its first weekly gain since Feb. 1.
Economists in a Bloomberg News survey estimate the Labor Department will say today that U.S. payrolls expanded by 165,000 in February after a 157,000 gain the prior month, while the jobless rate likely held at 7.9 percent.
Japan Deficit
In Japan, Ministry of Finance data today showed the deficit in the current account, the widest measure of trade, was 364.8 billion yen ($3.8 billion) in January, compared with the median economist estimate of a 611.5 billion yen gap.
The yen slid 2.2 percent in the past week, the biggest drop among 10 developed nation currencies tracked by Bloomberg Correlation Weighted Indexes. The currencies of Norway and Sweden have been the biggest gainers, followed by the euro.
Japan’s currency has led declines this year as Prime Minister Shinzo Abe pushed the central bank to add to monetary stimulus to beat deflation. Haruhiko Kuroda, Abe’s pick to become the next Bank of Japan (8301) governor, told lawmakers this week that the scale of the BOJ’s asset purchases was insufficient to achieve its 2 percent inflation target.
Koichi Hamada, an adviser to Abe, said today in Tokyo that monetary easing is justified in countering deflation.
China Imports
Europe’s common currency held gains against the dollar from yesterday after European Central Bank President Mario Draghi stuck to his view that the region will gradually recover later this year.
“With the euro risk receding and expectations for U.S. economic growth improving, the yen may come under selling pressure in a risk-on trade” said Junichi Ishikawa, an analyst at IG Markets Securities Ltd. in Tokyo.
The Australian dollar declined after China’s customs administration said today imports fell 15.2 percent in February from a year earlier, after a 28.8 percent increase in January. The median estimate of economists surveyed by Bloomberg News was for an 8.5 percent decline in imports.
The Chinese data “is not great news for the Aussie dollar,” said Imre Speizer, a strategist at Westpac Banking Corp. in Auckland. “The thing people will be looking into is why were imports so weak.”
The Aussie dollar weakened 0.3 percent to $1.0241 and New Zealand’s currency declined 0.3 percent to 82.56 U.S. cents.
To contact the reporters on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net; Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
