BLBG:Yen Rises Versus Euro On Global Slowdown Concern
The yen rose against higher-yielding currencies such as the Australian and New Zealand dollars as signs a global economic slowdown is deepening increased demand for safer assets.
Japan’s currency appreciated against 13 of its 16 major counterparts after reports showed manufacturing in the euro area and China contracted in August. Australia’s dollar fell to a five-week low versus the greenback after retail sales declined. Federal Reserve Chairman Ben S. Bernanke said last week a third round of bond purchases, or quantitative easing, shouldn’t be ruled out to spur growth. The pound strengthened.
“The dollar is out of favor on QE risk from the Fed, so that leaves the yen as the only proper safe-haven alternative,” said Jane Foley, a senior currency strategist at Rabobank International in London. “There was generally a risk-on mood during most of August and I think there may be a little recoiling from that this week.”
The yen appreciated 0.9 percent to 80.21 per Australian dollar at 12:51 p.m. London time after climbing to 80.12 yen, the strongest level since July 25. It gained 0.8 percent to 62.46 per New Zealand dollar.
Japan’s currency was 0.1 percent stronger at 98.45 per euro and 78.31 per dollar. The 17-nation shared currency was little changed at $1.2573.
U.S. financial markets are shut today for Labor Day.
‘Grave Concern’
A gauge of manufacturing in the 17-nation euro area was at 45.1 last month from 44 in July, London-based Markit Economics said today. A level below 50 indicates a contraction. A Chinese purchasing managers’ index of manufacturing compiled by HSBC Holdings Plc and Markit dropped to 47.6 for August, from 49.3 in July, a report showed.
Bernanke told central bankers and economists at the Kansas City Fed’s annual symposium in Jackson Hole, Wyoming, on Aug. 31 that “nontraditional policies” shouldn’t be ruled out to boost growth and reduce unemployment, which he called a “grave concern.”
The U.S. Labor Department’s monthly jobs report on Sept. 7 will show employers added 125,000 workers last month, compared with 163,000 in July, according to another Bloomberg survey. Unemployment will remain at 8.3 percent, according to the estimates. The jobless rate has stayed at or above 8 percent since February 2009.
‘Heighten Expectations’
“If the jobs numbers come in weak, that would significantly heighten expectations of QE3,” said Kengo Suzuki, a currency strategist at Mizuho Securities Co. in Tokyo. “The dollar may test lower over the near term.”
The U.S. currency has fallen 0.6 percent in the past month, according to Bloomberg Correlation-Weighted Indexes. The yen dropped 0.4 percent, and the euro rose 1 percent.
Australia’s dollar fell against all but one of its major peers as the government said retail sales dropped the most in almost two years in July. The so-called Aussie also slid to its weakest in more than a month against the yen after manufacturing shrank in China, the nation’s largest trading partner.
“The Aussie dollar had double bad news,” said Audrey Childe-Freeman, head of foreign-exchange strategy at Bank of Montreal (BMO) in London. “The currency has looked increasingly vulnerable in the past few weeks and this is continuing that.”
The Australian dollar fell 0.8 percent to $1.0242 after dropping to $1.0240, the lowest level since July 25. The currency has fallen at least 0.6 percent against 15 of its major counterparts in the past month. The New Zealand dollar weakened 0.7 percent to 79.76 U.S. cents.
Kiwi Declines
New Zealand’s dollar may drop to the lowest level in three months after breaking below its 200-day moving average last week, Commerzbank AG said, citing trading patterns.
The so-called kiwi is poised to drop to 74.58 U.S. cents, the weakest since June after breaching the moving average at 80.01 cents, technical analysts Karen Jones and Axel Rudolph in London, wrote in a note to clients today. The currency may find initial support at previous lows of 79.69 and 79.28, they said.
The pound rose against the euro and the dollar after a survey showed U.K. manufacturing shrank less than economists forecast last month.
A gauge of factory output, based on a survey by Markit Economics and the Chartered Institute of Purchasing and Supply, rose to 49.5 from a revised 45.2 in July, Markit said today. The median forecast of 28 economists in a Bloomberg News survey was for an increase to 46.1 from an initial estimate of 45.4.
Pound Rally
“The pound has rallied at the margin following this morning’s manufacturing data,” said Michael Derks, chief strategist at FxPro Group Ltd. in London. “Recently, there have been some slightly better numbers coming from the U.K. but at best the economy is going sideways.”
The U.K. currency strengthened 0.2 percent versus the euro to 79.16 pence. It advanced 0.1 percent to $1.5884.
Sweden’s krona depreciated after a report showed manufacturing shrank at the fastest pace since May 2009.
The purchasing managers’ index dropped to a seasonally adjusted 45.1 for August from 50.6 in July, Stockholm-based Swedbank AB (SWEDA) said.
The krona weakened 1 percent versus the euro to 8.4171, and slipped 1 percent to 6.6940 per dollar.
To contact the reporter on this story: David Goodman in London at dgoodman28@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
