BLBG: Yen Reaches 3-Month High Versus Dollar on Risk Aversion
The yen reached a three-month high against the dollar as concern global economic growth remains sluggish prompted demand for haven assets.
Japan’s currency was little changed as global foreign exchange market voltility slowed to almost the lowest level since 2007. India’s rupee climbed to an 11-month high versus the dollar as the clearest election results in three decades boosted investor confidence in the nation. Sweden’s krona weakened to a four-week low versus the dollar as unemployment rose in April.
“You see dollar yen bouncing a little bit off these levels,” Sebastien Galy, a senior currency strategist at Societe Generale SA in New York, said in a phone interview. “Growth or lack of inflation plays some role.”
The yen was little changed at 101.50 per dollar at 5 p.m. New York time, after reaching 101.10, the strongest since Feb. 5. Japan’s currency fell 0.1 percent to 139.15 per euro after touching 138.67, the strongest level since Feb. 7. The euro rose 0.1 percent to $1.3709 after falling to $1.3648 on May 15, the lowest since Feb. 27.
ECB Watch
JPMorgan Chase & Co.’s Global FX Volatility Index fell to 6.33 percent. It declined to 6.21 percent on May 9, the lowest level since July 9, 2007 on a closing basis.
The euro briefly pared gains as Yves Mersch, European Central Bank executive board member, said “we have the tools to further loosen our monetary policy.” He said the probability of ECB action in June has increased.
ECB President Mario Draghi has signaled officials may add monetary stimulus next month because policy makers are “dissatisfied” with the inflation outlook, in part due to an increase in the exchange rate. The ECB meets June 5.
Malaysia’s currency reached a five-month high after the nation’s economic growth and current-account surplus beat forecasts. The ringgit rallied 0.7 percent, the biggest gain in a month, to 3.2108 per dollar.
Russian stocks and the ruble extended last week’s rally as President Vladimir Putin ordered troops near Ukraine’s border back to base, signaling a possible easing of tensions before presidential elections in six days.
The currency strengthened 0.7 percent to 40.2740 against the central bank’s target dollar-euro basket.
Yen Gain
The yen advanced earlier versus most of its 16 major peers.
The difference between U.S. Treasuries 10-year and similar-maturity Japanese yields traded at 1.95 percentage points, after shrinking to 1.89 percentage points on May 15, the least since October, based on closing levels.
The yen is gaining amid “kind of a Monday morning panic,” Peter Gorra, head of foreign-exchange trading in New York at BNP Paribas SA, said in a phone interview. “People read the press over the weekend and they get a little bearish. Treasuries that are supposed to, yield wise, stay flat to trade higher now seem to be putting new momentum to the downside, which is causing a growth scare.”
Fed Policy
The Federal Reserve will release minutes of its April 29-30 meeting on May 21. At that gathering the Federal Open Market Committee reduced monthly bond buying to $45 billion, down from $85 billion when the Fed started trimming purchases in December. Fed Chair Janet Yellen is scheduled to give the New York University Commencement speech on the same day.
The Bloomberg U.S. Dollar Index, which tracks the greenback against 10 major currencies, was little changed at 1,007.78 after climbing to 1,011.43 on May 15, the highest since May 2.
Narendra Modi’s Bharatiya Janata Party won 282 of 543 parliamentary seats, more than the 272 needed to form a government, according to India’s Election Commission. The BJP has garnered the nation’s first single-party majority since 1984.
The rupee rose 0.3 percent to 58.5950 per dollar after touching 58.3750, the strongest level since June 18, according to prices from local banks compiled by Bloomberg.
Sweden’s krona weakened versus most of its major peers after unemployment in the nation increased to 8.7 percent in April from 8.6 percent in March. Economists in a Bloomberg survey predicted a drop to 8.5 percent.
The krona weakened 0.5 percent to 9.0340 per euro and depreciated 0.4 percent to 6.5899 per dollar after touching 6.6049, the least since April 22.
To contact the reporter on this story: John Detrixhe in New York at jdetrixhe1@bloomberg.net
To contact the editors responsible for this story: Dave Liedtka at dliedtka@bloomberg.net Paul Cox
