Yen Set for Fourth Monthly Gain Versus Dollar on Signs of Global Slowdown
Aug. 31 (Bloomberg) -- Shaun Osborne, chief currency strategist at TD Securities Inc., talks about the outlook for the dollar-yen exchange rate. Osborne speaks with Deirdre Bolton on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
Aug. 31 (Bloomberg) -- Thomas Harr, Singapore-based Asia foreign-exchange strategy head at Standard Chartered Plc, talks about Japan's attempts to stem gains in the yen. Bank of Japan Governor Masaaki Shirakawa and his board expanded a bank-loan program by 10 trillion yen ($118 billion) after an emergency meeting yesterday in the wake of the yen reaching a 15-year high. Harr also discusses the outlook for the Japanese and U.S. economies. He speaks with Linzie Janis on Bloomberg Television's "Global Connection." (Source: Bloomberg)
Aug. 30 (Bloomberg) -- Sean Callow, a senior foreign-exchange strategist in Sydney at Westpac Banking Corp., talks about the outlook for the yen. The yen pared its loss against the dollar on speculation the Bank of Japan’s decision to introduce more credit-easing measures won’t be enough to weaken the Japanese currency from near a 15-year high. Callow talks with Linzie Janis on Bloomberg Television's "Global Connection." (Source: Bloomberg)
Aug. 30 (Bloomberg) -- Frederic Neumann, a Hong Kong-based economist at HSBC Holdings Plc, talks about the Bank of Japan's expansion of its bank-loan program and its implications for the yen and the nation's economy. The BOJ will boost the amount of funds in the facility by 10 trillion yen ($116 billion) to a total of 30 trillion, the bank said in a statement after an emergency meeting in Tokyo. Neumann also discusses Federal Reserve monetary policy. He talks with Linzie Janis on Bloomberg Television's "Global Connection." (Source: Bloomberg)
The yen headed for a fourth monthly gain versus the dollar, the longest winning streak in more than 1 1/2 years, as concern the global economic recovery is faltering boosted demand for Japan’s currency as a refuge.
The yen was set to complete monthly advances against all of its 16 major counterparts after New Zealand finance company South Canterbury Finance Ltd. filed for receivership. The rebound in U.S. home prices probably slowed in June, while consumer confidence languished near a five-month low, economists said before reports today. The Swiss franc rose to a record against the euro as Asian stocks slid, curbing demand for higher-yielding assets.
“Safe-haven demand pushed the yen stronger,” said Simon Derrick, chief foreign-exchange strategist at Bank of New York Mellon Corp. in London. “The collapse of South Canterbury Finance was a catalyst for risk aversion flows back into the Japanese currency.”
The yen strengthened to 84.47 per dollar at 6:46 a.m. in New York from 84.62 yesterday. It has strengthened 2.4 percent against the greenback since July 30. Japan’s currency was little changed at 107.22 yen per euro after earlier appreciating as much as 0.9 percent to 106.18. The dollar erased earlier gains against the euro, weakening 0.3 percent to $1.2695.
The franc appreciated to a record 1.29 per euro from 1.2993 yesterday. It was at 1.0206 per dollar from 1.0263 yesterday, after reaching 1.0176, the strongest since Jan. 14.
U.S. Employers
U.S. employers cut 100,000 positions in August after a reduction of 131,000 in the previous month, according to a Bloomberg News survey of economists before the Labor Department’s Sept. 3 report. The jobless rate probably rose to 9.6 percent this month from 9.5 percent.
Recent figures indicating slowdowns in U.S. housing, business investment and consumer spending are prompting economists to lower second-half growth forecasts. Data from the Commerce Department released Aug. 27 showed the U.S. economy grew at an annual rate of 1.6 percent in the second quarter, less than the 2.4 percent estimate previously calculated.
Federal Reserve Chairman Ben S. Bernanke said over the weekend that growth during the past year has been “too slow” and unemployment “too high.” A handoff from fiscal stimulus and inventory restocking to consumer spending and business investment “appears to be under way,” he said.
Cumulative Inflows
Cumulative inflows into the yen this week were 1 1/2 times the average compared with the previous year, and inflows into francs totaled two times the average amount, according to iFlow data from BNY Mellon, the world’s largest custodial bank, with more than $20 trillion in assets under administration.
“Worries that economies worldwide are cooling is prevailing,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. Ltd. in Tokyo. “The Swiss franc along with the yen are likely to remain popular safe-haven plays.”
Futures traders raised bets to the most in three weeks that the franc will gain versus the dollar, data from the Commodity Futures Trading Commission showed on Aug. 27.
The difference in the number of wagers by hedge funds and other large speculators on an advance in the franc compared with those on a drop -- so-called net longs -- was 13,868 on Aug. 24, the highest since Aug. 3, compared with 11,750 a week earlier.
The MSCI Asia Pacific Index of regional shares fell 1.8 percent and the Nikkei 225 Stock Average tumbled 3.6 percent today. The Stoxx 600 Europe Index fell 1 percent.
The New Zealand dollar dropped for a second day on renewed concern that slowing growth may hamper prospects for successive interest-rate increases in the South Pacific nation.
Support ‘Vulnerable’
“A slightly weaker New Zealand dollar may result from announcements and local economic data,” Khoon Goh, head of market economics and strategy at ANZ National Bank Ltd. in Wellington, wrote in a research note today. “Support levels look vulnerable.” Support is an area where analysts anticipate orders to buy a currency.
Home-building permits rose 3.1 percent in July after gaining a revised 3.3 percent in June, Statistics New Zealand said today. The government said it would repay all depositors of South Canterbury Finance, a Timaru-based financial institution with about NZ$1.6 billion ($1.12 billion) of assets.
The nation’s sovereign creditworthiness isn’t immediately affected by the decision to pay money owed to South Canterbury Finance’s debenture holders under the New Zealand Crown’s retail deposit guarantee, Standard & Poor’s Ratings Services said today.
Kiwi Falls
The so-called kiwi declined to 70 U.S. cents from 70.71 cents and slid to 59.15 yen from 59.83 yen.
Gains in the yen were tempered after Japanese Finance Minister Yoshihiko Noda said today the government is ready to take “bold” action on currencies if necessary.
Noda reiterated that currency movements have been one-sided and that he is watching the foreign-exchange market with great interest. The yen has extended its advance since July 30 against the euro to 5.9 percent on speculation the Bank of Japan’s decision yesterday to increase credit-easing measures won’t be enough to weaken the Japanese currency.
The BOJ said at an emergency meeting it will boost the amount of funds in a lending facility to a total of 30 trillion yen ($355 billion) while keeping its key rate at 0.1 percent.
Pressure on the central bank has been mounting since it held the target lending rate and refrained from expanding credit measures at an Aug. 9-10 meeting. The yen reached 83.60 per dollar on Aug. 24, the strongest level since June 1995.
To contact the reporters on this story: Keith Jenkins in London at Kjenkins3@bloomberg.net; Yasuhiko Seki in Tokyo at yseki5@bloomberg.net
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