The yen and the Swiss franc weakened against their major counterparts as economic reports from Japan to Sweden added to signs the global recovery is gathering pace, damping demand for safer assets. Japan’s currency fell as European manufacturing growth accelerated to the fastest pace in more than 10 years, boosting the appeal of higher-yielding securities. The euro extended yesterday’s advance versus the franc amid speculation European Central Bank President Jean-Claude Trichet will indicate this week a readiness to increase interest rates. The Swedish krona climbed after economic growth beat economists’ estimates. “Generally, equities are well bid, as are emerging-market currencies,” said Henrik Gullberg, a currency strategist at Deutsche Bank AG in London. “This is an environment conducive to more risk taking and that’s the primary reason for weakness in the yen and franc.” The yen weakened to 113.64 per euro as of 10:47 a.m. in London, from 112.91 in New York yesterday. Japan’s currency lost 0.4 percent to 82.12 per dollar. The euro was at $1.3839 from $1.3806. Europe’s common currency climbed to 1.2873 francs, from 1.2823. Switzerland’s currency declined versus all 16 of its most-actively traded peers, except the yen. The Stoxx Europe 600 Index gained for a third day, jumping 0.4 percent and the MSCI Asia Pacific Index of shares climbed 1.2 percent. U.S. stock-index futures advanced. Growth Forecast A gauge of manufacturing in the euro region rose to 59 last month from 57.3 in January, London-based Markit Economics said in an e-mailed report today, confirming a Feb. 21 estimate. That’s the highest since June 2000. Japanese payrolls increased by 170,000 in January from a month earlier, the statistics bureau said today in Tokyo. The jobless rate held at 4.9 percent. The European Commission raised its economic-growth forecast for 2011. Gross domestic product in the euro region may increase 1.6 percent, above an earlier forecast of 1.5 percent growth, the Brussels-based commission said in a report published today. Australian retail sales gained 0.4 percent in January from a month earlier, the Bureau of Statistics said in Sydney today, beating the 0.3 percent median forecast in a Bloomberg survey. Japan’s benchmark interest rate of as low as zero compares with Australia’s 4.75 percent rate, attracting investors to the South Pacific nation’s higher-yielding assets. The ECB’s main refinancing rate is 1 percent. Sweden’s gross domestic product expanded 1.2 percent in the fourth quarter from 2.1 percent in the prior three months, Stockholm-based Statistics Sweden said today on its website. That compares with a 1 percent median estimate in a Bloomberg survey of 17 economists. Annual growth was at 7.3 percent, the fastest pace in at least 15 years. U.S. Manufacturing The krona advanced 0.4 percent to 6.3004 against the dollar, after appreciating 1.6 percent yesterday. Against the euro, it strengthened 0.1 percent to 8.7227. It has gained this year versus all its 16 most-actively traded counterparts. The Institute for Supply Management’s U.S. manufacturing index rose to 61.0 in February, the highest since May 2004, a Bloomberg survey showed before today’s report. The euro completed a third monthly advance versus the dollar in February before the ECB, which has kept its key interest rate at 1 percent since May 2009, holds its next policy meeting on March 3. ECB governing council member Mario Draghi said on Feb. 26 that inflation pressures are forcing policy makers to focus more on the timing of interest rate increases. Bernanke Testimony UBS AG raised its forecasts for the 17-nation common currency, citing investor perceptions that the ECB may be nearer to raising rates than the Federal Reserve. UBS sees the euro at $1.37 and $1.30 in one and three months respectively, from previous forecasts for $1.30 and $1.25, Gareth Berry, a currency strategist in Singapore, wrote in an investor report today. Fed Chairman Ben S. Bernanke is scheduled to deliver a semiannual report on monetary policy today to the Senate Banking Committee and is due to testify to the House Financial Services Committee tomorrow. “The markets expect the ECB to shift to a hawkish policy stance and the Fed’s Bernanke to have a mildly dovish testimony,” said Akira Hoshino, chief manager of the foreign- exchange trading department in Tokyo at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan’s largest lender by market value. “If this were to happen as anticipated, the euro could be bought.” Europe’s shared currency has risen 1.5 percent this year, while the dollar has lost 2.3 percent, according to Bloomberg Correlation-Weighted Currency Indexes, which track the currencies of 10 developed nations. The dollar dropped yesterday to the lowest since August 2008, according to the indexes. Ringgit Strengthens Malaysia’s ringgit rose for a third day after a Chinese report showed manufacturing expanded more than economists had forecast. The National Bureau of Statistics and Federation of Logistics and Purchasing said China’s Purchasing Managers Index was at 52.2 in February, exceeding the median forecast of 52.1 in a Bloomberg survey. Overseas investors boosted their holdings of ringgit- denominated debt by 7 percent during January to a record, the central bank said late yesterday. “The economic data provides some support for the market and we see sustained confidence among foreign investors in the ringgit,” said Mohd Yazid Safuan, head of treasury sales and trading at Al Rajhi Banking & Investment Corp. in Kuala Lumpur. The ringgit advanced 0.5 percent to 3.0359 per dollar, according to data compiled by Bloomberg. To contact the reporters on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net; Candice Zachariahs in Sydney at czachariahs2@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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