BLBG:Yen Snaps 2-Day Gain as Investors Weigh BOJ Easing; Aussie Falls
The yen fell, snapping a two-day advance, as investor expectations grew for new monetary easing measures by the Bank of Japan (8301) next week.
The currency, which has plunged 11 percent against the dollar in the past three months, resumed declines after Economy Minister Akira Amari told Dow Jones that the yen is still in the process of correcting. It had rallied over the past two days after comments by Japanese officials damped expectations the government will push for further declines. Australia’s dollar slid after data showed the nation lost jobs in December. Thailand’s baht touched a 17-month high after an eight-day gain.
“The yen is in the tug-of-war situation,” said Minori Uchida, the Tokyo head of global market research at Bank of Tokyo-Mitsubishi UFJ Ltd. “We’re seeing expectations for a weaker currency and also official comments against that view ahead of the BOJ meeting.”
The yen slid 0.4 percent to 88.69 per dollar at 7:07 a.m. in London, after gaining 1.2 percent over the previous two days. It touched 89.67 on Jan. 14, the lowest level since June 2010. Japan’s currency fell 0.5 percent to 118.00 per euro. The euro rose 0.1 percent to $1.3305.
The MSCI Asia Pacific Index of regional shares was little changed after rising as much as 0.6 percent today.
BOJ Governor Masaaki Shirakawa, who’s due to step down in April, and his fellow board members will review the central bank’s inflation goal at their Jan. 21-22 meeting. Prime Minister Shinzo Abe has called for the target to be doubled to 2 percent and said on Jan. 13 that he wants a BOJ chief “who can push through bold monetary policy.”
Buy Rumor
“There may be a ‘buy the rumor, sell the fact’ reaction whereby the yen strengthens after the BOJ announces its easing measures,” Joseph Capurso, a currency strategist in Sydney at Commonwealth Bank of Australia (CBA), the nation’s largest lender, wrote in a research note today.
CBA recommended using rallies in the yen as an opportunity to short the currency, targeting it to decline to 96 per dollar, Capurso wrote.
Asian Development Bank President Haruhiko Kuroda is the “No. 1 candidate” for governor, according to a research note today by Masaaki Kanno, the chief economist in Tokyo at JPMorgan Securities Japan Co. Kuroda advocated unlimited monetary easing in a seminar in Tokyo on Jan. 11.
Japan’s tertiary index fell 0.3 percent in November from a month earlier, when it decreased 0.1 percent, the Ministry of Economy, Trade and Industry said today.
Yen Rally
The yen began a two-day rally after Japan’sAmari said on Jan. 15 that an excessively weak currency may drive up import costs and hurt households. The Nikkei newspaper yesterday quoted Shigeru Ishiba, secretary general of the ruling Liberal Democratic Party, as saying yen depreciation may trouble some industries.
Amari said his comments earlier in the week were misinterpreted, according to the interview with Dow Jones, triggering a drop in the yen after it gained as much as 0.5 percent today.
“Mostly foreigners sold the yen in reaction to the English headlines on Amari comments,” said Yuji Saito, the director of the foreign-exchange department in Tokyo at Credit Agricole SA. (ACA)
The yen has tumbled 12 percent over the past three months, making it the worst performer among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar has added 0.2 percent and the euro has risen 1.8 percent.
In Australia, employment fell by 5,500 in December, government data showed today. That compared with economist estimates for a 4,000 increase.
Australian Jobs
“Domestically, the economy does not look that strong,” said Thomas Harr, the head of Asia local markets strategy at Standard Chartered Plc in Singapore. “In the very, very short term, there’s a risk to the downside for the Aussie.”
Australia’s dollar lost 0.6 percent to $1.0510. It touched $1.0599 on Jan. 10, the strongest since Sept. 14.
The 17-nation euro failed to snap a two-day loss after Luxembourg’s Jean-Claude Juncker, who leads a group of euro-area finance ministers called the euro’s value “dangerously high” this week. The world’s leading economies are on the brink of a “currency war,” Bank Rossii First Deputy Chairman Alexei Ulyukayev said yesterday.
The euro climbed to a 10-month high of $1.3404 on Jan. 14 after European Central Bank President Mario Draghi signaled on Jan. 10 there was no immediate plan to ease monetary policy further. ECB Governing Council member Ewald Nowotny said yesterday that he doesn’t expect the currency to keep appreciating in the longer term and the euro’s recent gains against the dollar are not a concern.
ECB Rhetoric
“The euro has added to its gains in recent weeks as European bond markets have improved and the European Central Bank’s rhetoric has shifted from dovish to neutral,” Nick Bennenbroek, the head of currency strategy at Wells Fargo & Co. in New York, wrote in a note yesterday. “We view recent strength as a selling opportunity as economic underperformance should lead to euro weakness over time.”
Thailand’s baht touched 29.72 per dollar, the strongest since August 2011, before trading unchanged at 29.84. The currency pared gains after Finance Minister Kittiratt Na-Ranong said the baht is “not at a good level” and exporters will face difficulties should it strengthen further.
To contact the reporters on this story: Monami Yui in Tokyo at myui1@bloomberg.net; Hiroko Komiya in Tokyo at hkomiya1@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
