BLBG: Yen Drops Versus Peers as Tankan Fuels Easing Speculation
The yen rose against all of its 16 most-traded counterparts amid investor concern that Chinese manufacturing was weaker as official government data conflicted with a private-sector purchasing-manager index.
Japan’s currency strengthened even after the Bank of Japan (8301)’s Tankan report showed company sentiment failed to improve in the first quarter. Norway’s krone rose after a report showed credit growth accelerated in February. The dollar rose against Europe’s shared currency as a report showed U.S. manufacturing increased last month.
“Asian and European traders gave the benefit of the doubt to the official Chinese PMI, but the U.S. traders are having second thoughts about the PMI data and looking at the private- sector numbers,” said Boris Schlossberg, director of research at the online currency trader GFT Forex in New York. “The market is really focusing on economic data.”
The yen strengthened 0.9 percent to 82.11 per dollar at 10:54 a.m. New York time and climbed 1.2 percent to 109.19 per euro. The dollar appreciated 0.3 percent versus the 17-nation currency to $1.3298, after reaching $1.3386 on March 27, the weakest level since Feb. 29.
The purchasing manager’s index released yesterday by China’s logistics federation and the National Bureau of Statistics for March rose to a one-year high of 53.1. In contrast, a PMI from HSBC Holdings Plc and Markit Economics showed manufacturing contracting and export orders declining. The index fell to 48.3 in March from 49.6 the previous month.
The figures compare with a gain in the Institute for Supply Management’s U.S. factory index to 53.4 from 52.4 in February. Economists forecast an increase to 53. Fifty is the dividing line between growth and contraction.
China Focus
“China is the main focus today,” said Fabian Eliasson, head of U.S. currency sales at Mizuho Financial Group Inc. in New York. “We had some disappointing numbers out of Europe, and Chinese PMI from came in lower and there are two conflicting reports, so that is contributing to the risk-off scenario.”
The Standard & Poor’s 500 Index was up 0.2 percent after falling 0.3 percent earlier.
The yen has gained 1.1 percent in the past week against nine developed-nation peers, according to the Bloomberg Correlation-Weighted Indexes. The Japanese currency had its worst quarter since 1995 in the three months ended March 31, falling 10 percent as the BOJ flooded the economy with 10 trillion yen ($120.9 billion) and set a 1 percent inflation goal, according to data compiled by Bloomberg. The dollar gained 0.1 percent in the past week and the euro fell 0.4 percent.
Japanese Manufacturing
The Tankan index for Japan’s largest manufacturers was unchanged last quarter from minus 4 in December, the BOJ said today in Tokyo. That was less than the median estimate of minus 1 in a Bloomberg News survey of economists. A negative number means pessimists outnumber optimists.
Norway’s krone rose 0.2 percent to 5.6833 per dollar and gained 0.6 percent to 7.5530 versus the euro after a report today showed credit growth at an annual pace of 7 percent in February, up from 6.9 percent in the first month of the year. The central bank last month lowered its main interest rate for a second time since December to support growth and avoid excessive gains in the krone.
Australia’s dollar was the second-best performer against the greenback, appreciating 0.5 percent to $1.0398 after the U.S. factory data.
‘Right Direction’
“The ISM was not a bad number at all and was particularly encouraging from an employment perspective,” said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co. in New York. “It’s not full risk-on. While the U.S. economy is moving in the right direction, it’s not accelerating and faces headwinds from overseas.”
The Reserve Bank of Australia will hold a policy meeting tomorrow. While all economists in a Bloomberg poll forecast the central bank will leave its benchmark interest rate unchanged at 4.25 percent at the meeting, traders expect a cut of 74 basis points, or 0.74 percentage point, over the coming 12 months, according to a Credit Suisse Group AG index based on overnight index swap rates.
To contact the reporter on this story: Allison Bennett in New York at abennett23@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
