BLBG:Yen Weakens With Australian Dollar as Japan Shares Gain
The yen weakened for a second day and Japanese shares rallied as traders bet Group of 20 finance ministers and central bankers will endorse the Bank of Japan’s monetary easing. Chinese stocks dropped, Australia’s dollar fell and corn declined.
The Japanese currency slid 0.5 percent against the dollar by 7:30 a.m. in London as the Topix index rose 0.7 percent. Euro Stoxx 50 futures declined 0.2 percent as the MSCI Asia Pacific Index of regional equities fell 0.1 percent and the Shanghai Composite Index dropped 0.6 percent. Standard & Poor’s 500 Index contracts lost 0.1 percent after the gauge climbed 0.3 percent in New York. The Aussie lost 0.7 percent against the U.S. dollar and corn tumbled 1 percent.
Russian Deputy Finance Minister Sergei Storchak said the G-20, at a meeting this weekend, probably won’t call for a tapering of stimulus in nations including Japan. Federal Reserve Chairman Ben S. Bernanke, speaking to Congress yesterday, damped concern its bond-buying program to support the economy would be curbed. Risks that China’s growth this year will fall short of forecasts are increasing, the IMF said in its annual assessment of the world’s second-largest economy.
“Bernanke’s testimony was in line with expectations and what he has been saying over the past week or two,” said Binay Chandgothia, a Hong Kong-based portfolio manager at Principal Global Investors, which manages $250 billion. China’s leadership “seems to be accepting a lower trajectory of growth and they don’t look like jumping in and taking short-term measures.”
Jobless Claims
Weekly U.S. jobless claims data due today will help investors assess the outlook for the Fed’s $85 billion-a-month bond buying program, which capped increases in borrowing costs and stoked a 33 percent jump in global equities in the past three years. Bernanke speaks to lawmakers in the Senate today.
Samsung Electronics Co., the largest smartphone maker, retreated 1.9 percent, and LG Display Co., the world’s second-largest flat-panel maker, was down 3.1 percent. Taiwan Semiconductor Manufacturing Co., the world’s largest contract maker of chips, dropped 3.2 percent.
Korea’s Kospi Index (KOSPI) fell 0.6 percent while the MSCI Emerging Markets Index of developing-nation stocks fell 0.2 percent after gaining the past seven days.
“Downside risks” to the IMF’s 7.75 percent growth estimate have risen after a gauge of manufacturing weakened in June, the Washington-based fund said. The report, forecasting a second-half pickup, doesn’t reflect July 15 government data showing expansion slowed to 7.5 percent last quarter.
Bonds Climb
China’s June new home prices rose in all but one city, led by the biggest metropolitan centers, underscoring Premier Li Keqiang’s struggle to rein in speculative investment even as the economy cools.
A gauge tracking Chinese property developers sank 1.2 percent. Guangzhou Pearl River Industrial Development Co. retreated 2.9 percent and Shanghai Wanye Enterprises Co. slid 2.8 percent. Beijing North Star Co. declined 2.7 percent.
Benchmark yields in Japan and Australia fell to month lows. Japan’s 10-year government bond yield slid to as low as 0.805 percent, the least since June 19, while the 5-year rate touched 0.285 percent, the lowest since June 13.
Australia’s business confidence index for the next three months dropped to minus 1 in the second quarter from 2 in the previous three-month period, National Australia Bank Ltd. said in a survey released today.
The Aussie slid to 91.77 U.S. cents, while the country’s 10-year yield sank as much as nine basis points to 3.65 percent, a level not seen since June 20. The yield in Singapore dropped seven basis points to 2.44 percent.
Mixed Message
The yen fell to 100.05 per dollar after slipping 0.5 percent yesterday. The Bloomberg Dollar Index, a gauge of the greenback against 10 peers, was up 0.2 percent at 1,034.76 after increasing for the first time this week yesterday. The index added 0.2 percent in New York.
Goldman Sachs Group Inc. said rivals have been too aggressive in anticipating tighter Fed monetary policy. Goldman Sachs predicted the dollar will depreciate 7 percent to $1.40 per euro over the next 12 months, while the median of 66 analysts’ estimates compiled by Bloomberg is for a 5 percent jump to $1.24 by the middle of 2014.
Mixed messages from the Fed are stoking dollar swings, with implied volatility on one-month options for the greenback versus the euro and the British pound up the most relative to six-month contracts since at least March, data compiled by Bloomberg show.
Corn declined to $4.97 a bushel, falling for a second day, on a forecast for rains in the U.S. Midwest, helping ease concern that crop stress will hurt a record harvest in the world’s largest grower and exporter. Crude oil in New York lost 0.1 percent to $106.36 a barrel.
To contact the reporters on this story: Pratish Narayanan in Singapore at pnarayanan9@bloomberg.net; Adam Haigh in Sydney at ahaigh1@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
