BLBG:Yen Weakens for Third Day Before U.S. Payroll Report; Euro Strengthens
The yen fell for a third day versus the euro and the dollar on speculation U.S. employers increased hiring and as stock gains reduced demand for the relative safety of Japan’s currency.
The yen weakened against all but one of its 16 major counterparts as Finance Minister Jun Azumi said he’ll take action on speculative currency moves. The euro extended a weekly gain versus the dollar as optimism European leaders are moving toward a solution for the debt crisis boosted demand for the region’s assets. Switzerland’s franc fell after the nation said it may consider additional steps to help the central bank limit the currency’s appreciation.
“Recent U.S. data have been slightly more optimistic than what has been factored into the market,” said Neil Jones, head of European hedge-fund sales at Mizuho Corporate Bank Ltd. in London. “That’s helping risk and weighing on safe-haven currencies such as the dollar and yen. The market is in the process of reducing its risk-off positions.”
The yen fell 0.6 percent to 105.24 per euro at 7:13 a.m. in New York, extending this week’s decline to 2.3 percent, the most since the period ended Oct. 14. Japan’s currency weakened 0.4 percent to 78 per dollar. The euro strengthened 0.2 percent to $1.3491, having risen 1.9 percent this week, also the most since Oct. 14.
U.S. employers hired 125,000 workers in November after adding 80,000 the previous month, according to a Bloomberg survey before today’s Labor Department report. The Institute for Supply Management said yesterday its gauge of manufacturing rose to 52.7 in November, the most in five months. Readings above 50 indicate growth.
‘Bright Spots’
“We’re actually seeing the U.S. economy being one of the few bright spots out there,” said Robert Rennie, Sydney-based chief currency strategist at Westpac Banking Corp., Australia’s second-largest lender. “Better U.S. data is in the short term a modest negative for the U.S. dollar.”
The Stoxx Europe 600 Index gained 1.2 percent, and futures on the Standard & Poor’s 500 Index expiring in December advanced 1 percent.
The yen climbed to a postwar record of 75.35 per dollar on Oct. 31, prompting Japan to intervene in markets for the third time this year to stem gains that endangered an export-led economic recovery. The nation sold 9.09 trillion yen from Oct. 28 to Nov. 28, the Ministry of Finance said this week, the most on a monthly basis in data going back to 1991.
More Attention
“Given the massive intervention on Oct. 31 and possible surreptitious intervention thereafter, I think the market is paying a little bit more of attention now,” said Callum Henderson, global head of foreign-exchange research in Singapore at Standard Chartered Plc.
Japan’s Trade and Industry Minister Yukio Edano said today he doubts the strong yen reflects the country’s economic fundamentals. His comments came after a government report showed capital spending in the world’s third-largest economy fell 9.8 percent from a year earlier in the three months ended Sept. 30.
The euro rose for a third day versus the dollar as Germany and France lead the push for closer economic ties among the region’s nations and lock in tougher enforcement of budget rules to counter the debt crisis
German Chancellor Angela Merkel today welcomed French President Nicolas Sarkozy’s “important” speech yesterday in which he warned that the euro region’s fissures threaten to blow the 17-nation shared currency apart. She is due to hold talks with the French leader in Paris on Dec. 5 to coordinate their approach to a Dec. 9 summit.
ECB Meeting
ECB policy makers will meet on Dec. 8 to review interest rates. All but one of the 33 economists in a Bloomberg survey predict the central bank will cut borrowing costs by at least 25 basis points from the current 1.25 percent. The ECB unexpectedly lowered the key rate at its November meeting.
“On a three-month view, I’m looking lower for the euro because we’re seeing weak growth and easier policy” in Europe, said Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney. “The euro is not going to collapse, but I think it can edge lower.”
The franc fell for a third day against the euro after the Swiss government said late yesterday it was willing to “examine the feasibility of supporting measures.”
The steps, which may include negative interest rates, would help prop up the Swiss National Bank’s defense of a 1.20-franc ceiling versus the euro imposed on Sept. 6.
The franc depreciated 0.2 percent to 1.2353 per euro, extending its weekly loss to 0.3 percent, the steepest since the period ending Nov. 11. It was little changed at 91.65 centimes per dollar.
To contact the reporters on this story: Keith Jenkins in London at Kjenkins3@bloomberg.net; Masaki Kondo in Singapore at mkondo3@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
