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Yen Is Near Two-Month Low Against Euro on Signs Global Economy Recovering
The yen traded near a two-month low against the euro as signs Europe’s economic recovery remains resilient damped demand for Japan’s currency as a refuge.
The yen headed for a monthly loss against 13 of its 16 major counterparts after European confidence in the economic outlook rose to the highest level in more than two years and before a report forecast to show inflation quickened in the euro region. The dollar was near the lowest since May against the euro on concern a government report today will show the U.S. economic recovery is slowing.
“People are beginning to realize Europe isn’t as bad as they had expected,” said Makoto Noji, a senior market analyst at Mizuho Securities Co. in Tokyo. “Cross currencies may climb slowly against the yen.”
The yen was at 113.36 per euro as of 8:01 a.m. in Tokyo from 113.51 in New York yesterday, after reaching 114.74 on July 28, the weakest since May 18. The yen traded at 86.69 per dollar from 86.79. The dollar was at $1.3076 per euro from $1.3079, after touching $1.3107 yesterday, the lowest since May 4.
The yen is headed for a 4.6 percent drop against the euro and a 2 percent gain against the dollar this month. The dollar has dropped 6.4 percent against the euro since June 30.
An index of executive and consumer sentiment in the euro nations increased this month to 101.3, the highest level since March 2008, the European Commission said yesterday.
Europe CPI
Consumer prices in the 16-member euro region rose 1.7 percent in July from a year ago after increasing 1.4 percent in June, according to the median estimate of economists in a Bloomberg News survey before the European Union statistics office in Luxembourg reports the data today.
The dollar headed for a 1.3 percent drop this week against the euro before reports today that economists said will show the U.S. economy and business activity expanded at a slower pace.
“The U.S. continues to see negative economic data,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Japan. “The dollar is locked under downward pressure.”
The U.S. economy grew at a 2.6 percent annual rate in the second quarter after expanding at a 2.7 percent pace in the first quarter, according to the median estimate of economists in a Bloomberg News survey before the Commerce Department reports the data today. The Institute for Supply Management-Chicago Inc. is forecast to report its business barometer fell to 56.0 in July from 59.1 in June, according to another Bloomberg survey.
Demand for the yen may also fall before a report forecast to show Japan’s industrial production grew at the slowest pace in more than a year last quarter, adding pressure on the government to boost consumer incentives as export growth cools.
Factory output rose 0.2 percent in June from May, according to the median estimate of 26 economists surveyed by Bloomberg News before Trade Ministry reports the data at 8:50 a.m. today in Tokyo. That would cap the smallest quarterly gain since production fell in the first three months of 2009.
To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net.
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