The yen and the dollar advanced against higher-yielding peers as a decline in stocks and concern the global economic recovery is losing steam boosted demand for the currencies as a haven. The dollar rose the most against the Australian dollar and the Norwegian krone among major currencies amid speculation the economy may be slowing enough for the Federal Reserve to increase bond purchases. The U.K. pound rebounded from a three- week low against the dollar after minutes of the Bank of England last meeting showed policy makers considered arguments for withdrawing emergency stimulus this month. “People are a little bit uncertain,” said Niels Christensen, chief currency analyst at Nordea Bank AB in Copenhagen, the most accurate euro-dollar forecaster among 48 analysts surveyed by Bloomberg in the 18 months through June. “How equity markets are performing” will drive currencies, he said. The yen appreciated 0.2 percent to 109.95 per euro as of 9:45 a.m. in London and by the same percentage to 85.45 per dollar. The dollar was little changed at $1.2884 per euro. It gained 0.3 percent to 90.23 cents against the Australian dollar and strengthened 0.4 percent to 6.1530 krone. The Stoxx Europe 600 Index lost 0.4 percent after gaining in the previous four days. Standard & Poor’s 500 Index futures lost 0.1 percent. Benchmark interest rates in Norway and Australia are 2 percent and 4.5 percent compared with a range of between zero and 0.25 percent in the U.S, attracting investors to the nations’ higher-yielding assets. Asset Purchases The Fed may have to buy more assets if inflation keeps slowing, James Bullard, president of the Fed Bank of St. Louis, said yesterday in an article in the Wall Street Journal. The U.S. central bank plans to buy Treasuries due from August 2016 to August 2020 tomorrow, after purchasing $2.551 billion of securities yesterday. Sterling rose 0.4 percent to $1.5644 after declining to $1.5499, the weakest level since July 27. It advanced by 0.3 percent to 82.46 pence per euro. The Monetary Policy Committee, led by Governor Mervyn King, voted 8-1 to keep the benchmark rate at 0.5 percent and their bond-purchase plan at 200 billion pounds ($313 billion), according to minutes of their Aug. 5 meeting released by the Bank of England today in London. Andrew Sentance pushed for an increase in the rate to 0.75 percent. The currency fell yesterday after a report showed consumer inflation slowed in July. King said last week the outlook for the U.K. economy is weaker than in May, and “if it is necessary to respond, then we are quite prepared to do that.” Bank of Japan The yen gained versus the euro amid prospects that Japanese policy makers won’t act to stem its advance. The Bank of Japan sees no immediate threat to the nation’s economy from the yen’s recent advance, Dow Jones Newswires reported yesterday, citing people familiar with the central bank’s thinking. A stronger currency diminishes the competitiveness of Japanese goods overseas. The yen advanced to a 15-year high of 84.73 per dollar on Aug. 11. “Mere expectations that the Bank of Japan may take action have prevented the yen from rising,” said Morio Okayasu, chief analyst in Tokyo at FOREX.com Japan Co., a unit of the online currency trading firm Gain Capital in Bedminster, New Jersey. “If the BOJ fails to take any action, it can add to a momentum to the yen.” The Australian dollar declined against 15 of its 16 major counterparts as reports today signaled the economy is cooling. A government index measuring the number of jobs available for skilled workers fell 0.3 percent in August. “The main downside risk for the Australian dollar is the growing evidence that the recovery in global growth is losing momentum,” Lee Hardman, a currency strategist at Bank of Tokyo- Mitsubishi UFJ Ltd. In London, wrote in a note to clients today. “Downside risks will dominate in the coming months.” To contact the reporter on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net

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