BLBG:Yen Advances After BOJ as Treasuries Climb on U.S. Budget Talks
The yen strengthened as the Bank of Japan (8301) maintained its inflation goal at 1 percent after newly elected Prime Minister Shinzo Abe called for a doubling of the target. Commodities declined, while Treasuries and German bunds advanced on concern U.S. budget talks are faltering.
Japan’s currency advanced 0.3 percent to 84.13 per dollar at 11:47 a.m. London time. Futures on the Standard & Poor’s 500 Index were little changed and European stocks fluctuated. UBS AG (UBSN) dropped 1.2 percent. Treasuries gained for a second day, and the S&P GSCI gauge of 24 commodities dropped 0.2 percent as copper extended the longest losing streak in 10 months. Oil in New York trimmed a four-day rally.
The yen gained against 14 of its 16 major counterparts even as the central bank expanded its asset-purchase fund and said it would reconsider its 1 percent inflation goal at its next meeting. Officials from U.S. President Barack Obama’s administration told business leaders that negotiations to avert more than $600 billion in automatic spending cuts and tax increases have deteriorated, according to a person familiar with the meeting.
“There had been an expectation that the BOJ would maybe do more,” said Melinda Burgess, a foreign-exchange strategist at Royal Bank of Scotland Group Plc in London. “There was a bit of market disappointment that they didn’t deliver as much as we were expecting. We’re seeing a bit of a selloff today on worries U.S. negotiations aren’t going as smoothly as we would have hoped.”
Yen Stimulus
The yen strengthened as much as 0.7 percent against the dollar, the biggest increase since Nov. 8. Japan’s currency gained 0.3 percent to 111.37 per euro. The euro advanced 0.2 percent to $1.3259. Japan’s central bank expanded its asset purchase funds to 76 trillion yen from 66 trillion yen, and kept its credit-lending program at 25 trillion yen.
The yen has tumbled 12 percent this year, the worst performer among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar has weakened 3.5 percent and the euro has dropped 1 percent.
The euro climbed toward an eight-month high against the dollar before a report analysts predict will show euro-area consumer confidence rose this month from the lowest level since May 2009. Europe’s shared currency reached $1.3308 yesterday, the strongest since April.
The Stoxx Europe 600 (SXXP) Index rose less than 0.1 percent after closing at a 19-month high yesterday. A gauge of technology companies retreated as Accenture Plc (ACN) said revenue from technology consulting, its biggest unit, fell 3 percent in the fiscal first quarter. Accenture slumped 5.4 percent in German trading, while Cap Gemini SA lost 2.9 percent in Paris.
UBS Declines
UBS shares declined and the cost of insuring the Swiss bank’s debt jumped the most in three months after Hong Kong regulators said they are investigating misconduct linked to interest rates. Credit-default swaps on UBS, which will pay $1.5 billion to settle charges with U.S. and U.K. regulators for manipulating rates, climbed four basis points to 92.8.
Areva SA (AREVA) slid 4.7 percent after the maker of nuclear reactors lowered its earnings forecast for next year. SBM Offshore NV surged 13 percent as the supplier of offshore oil rigs sought to settle a dispute with Talisman Energy Inc.
NYSE Euronext jumped 24 percent in European trading after IntercontinentalExchange Inc. was said to have held talks to buy the owner of the world’s biggest stock market.
Talks Falter
Obama officials told eight industry representatives at the White House that plans to vote on House Speaker John Boehner’s alternative proposal on taxes risk pushing the government past the deadline for spending cuts and tax increases to start.
“Cracks appeared in the fiscal-cliff negotiations,” said Stan Shamu, a strategist at IG Markets Ltd. in Melbourne. “The Republicans failed to come up with a reasonable compromise to President Obama’s proposal. Market participants decided to exercise caution despite U.S. leaders still insisting they are hoping to have something done by Christmas.”
Treasury 10-year yields fell four basis points, or 0.04 percentage point, to 1.77 percent, while the rate on similar- maturity German bunds declined two basis points to 1.41 percent.
The rate of U.S. economic growth for the third quarter will be revised up to 2.8 percent from 2.7 percent when the Commerce Department issues updated figures today, according to the median forecast in a Bloomberg survey. Sales of previously owned homes probably rose in November, a separate report is predicted to show.
Commodities Fall
Copper dropped 1 percent to $7,847 a metric ton for its sixth consecutive decline, the longest streak since Feb. 17. Wheat slumped 1.5 percent and New York oil fell to $89.85 a barrel. The S&P GSCI gauge of commodities is heading for the first annual decline since 2008.
The MSCI Emerging Markets Index (MXEF) fell less than 0.1 percent to 1,052.88, snapping two days of gains. The gauge has gained 15 percent this year.
The South African rand weakened 0.4 percent against the dollar, declining for a second day and leading losses among emerging-market currencies tracked by Bloomberg.
U.K. government bonds advanced, snapping a nine-day decline, after a report showed retail sales unexpectedly stagnated in November. The 10-year gilt yield fell two basis points to 1.94 percent.
To contact the reporters on this story: Emma Charlton in London at echarlton1@bloomberg.net; Richard Frost in Hong Kong at rfrost4@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
