BLBG:Yen Weakens to Eight-Month Low as Fed Awaited; Metals, Oil Climb
The yen weakened to an eight-month low while metals advanced after Japan’s machinery orders rose for the first time in three months and as investors awaited the outcome of a Federal Reserve policy meeting. Oil climbed as OPEC met in Vienna.
Japan’s currency slid against all of its major peers, depreciating 0.4 percent to 82.84 per dollar at 11:20 a.m. in London. Australia’s currency climbed to a three-month high and South Korea’s won traded near its strongest level in 15 months even after North Korea launched a rocket. The Stoxx Europe 600 Index advanced 0.1 percent to the highest since May 31, 2011. Standard & Poor’s 500 Index futures rose 0.1 percent. Commodities advanced, led by industrial metals and crude oil.
The Fed will announce $45 billion in monthly Treasury buying after a two-day meeting, a Bloomberg News survey of economists showed. The rise in Japanese machinery orders signals that companies expect the world’s third-largest economy to return to growth in 2013. Greece bought back enough bonds to meet a target necessary to obtain further aid, a government official said late yesterday.
“The yen is very much on the defensive,” said Jeremy Stretch, head of foreign- exchange strategy at Canadian Imperial Bank of Commerce in London. “There are hopes that we will see on-going monetary easing from the Fed today as well as the Bank of Japan next week.”
Operation Twist
Fed officials are considering whether to supplement $40 billion a month of mortgage-bond buying with purchases of Treasuries when their Operation Twist program expires at the end of the month. If expanded as expected, the new program will push the central bank’s balance sheet to almost $4 trillion.
The yen weakened 0.5 percent to 107.86 per euro. The 17- nation shared currency was little changed at $1.3019.
Australia’s dollar climbed 0.2 percent to $1.0548, the highest level since Sept. 17.
South Korea’s currency closed 0.2 percent stronger at 1,074.93 per dollar in Seoul. It touched 1,073.64, the strongest level since September 2011, before temporarily paring gains after North Korea confirmed it launched a rocket that put a satellite into orbit, showcasing the totalitarian regime’s progress in ballistic missile technology. The launch came a week before the South’s presidential election.
Greek bonds rallied for a fifth day, pushing the 10-year yield as much as 68 basis points lower to 12.53 percent, the least since the debt was restructured in March. Greece drew enough offers for its buyback of securities to meet a goal that’s crucial to unlocking aid from the International Monetary Fund and European Union.
Dow Rally
U.S. stocks rallied yesterday, with the Dow Jones Industrial Average erasing its decline since Election Day, as traders awaited progress on federal budget negotiations.
The increase in S&P 500 futures indicates the U.S. equities gauge will extend a five-week high. President Barack Obama is seeking a budget deal with Republican lawmakers to avert the so- called fiscal cliff, which would result in more than $600 billion of automatic tax increases and spending cuts next year. Obama reduced his demand for tax increases to $1.4 trillion from $1.6 trillion as he and House Speaker John Boehner traded another round of offers.
Should the Stoxx 600 close higher today, it will be the longest winning streak in 19 months. PSA Peugeot Citroen gained 7.4 percent as Europe’s second-largest carmaker said it will eliminate an additional 1,500 jobs and La Tribune reported that Algeria might take a stake in company. Wacker Chemie AG, the second-biggest maker of solar-grade silicon, rose 6.3 percent to a five-month high after China’s government announced a subsidy plan for photovoltaic projects.
Industrial Production
Euro-area industrial production unexpectedly fell in October as declines in Germany and France offset gains in Spain and Portugal. Output in the 17-nation euro area dropped 1.4 percent from September, when it declined 2.3 percent, the European Union’s statistics office in Luxembourg said today. Economists had forecast no change in October, according to the median of 34 estimates in a Bloomberg News survey. Output fell 3.6 percent from the year-earlier month.
Copper for delivery in three months rose for a third day in four, gaining 0.4 percent to $8,133.75 a metric ton on the London Metal Exchange. Aluminum advanced 0.8 percent to $2,132 a ton and zinc added 0.4 percent to $2,088.5 a ton.
Gold for immediate delivery rose 0.2 percent to $1,714 an ounce in London, gaining for the fourth day in five. Silver, platinum and palladium all advanced.
Brent Crude
Brent crude rose about 0.5 percent to $108.58 a barrel on the ICE Futures Exchange in London as most members of the Organization of Petroleum Exporting Countries signaled they’ll keep the output target unchanged as delegates met in Vienna.
Wheat dropped to the lowest level in five months after the U.S. Department of Agriculture raised its estimate on global inventories yesterday, boosted by higher-than-expected harvests in China and Australia.
The grain for delivery in March lost as much as 1.5 percent to $8.09 a bushel on the Chicago Board of Trade, the lowest for the most-active contract since July 11. It traded at $8.185 recently.
The MSCI Emerging Markets Index added 0.6 percent to 1,040.48, poised for the highest close since April 3 and its longest winning streak in three months. Russia’s Micex Index (INDEXCF) also rose for a sixth day, the longest period of gains since July 5.
To contact the reporter responsible for this story: Michael Shanahan at mshanahan3@bloomberg.net
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net
