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Yen Trades Near 15-Year High Against Dollar Amid Signs of Global Slowdown
The yen traded near a 15-year high against the dollar as signs that the global economic recovery is losing steam buoyed demand for Japan’s currency as a refuge.
The yen strengthened versus all its major peers last month before data this week forecast to show companies in the U.S. added fewer jobs and U.K. house prices fell. The Swiss franc was near a record high against the euro after global stocks slid yesterday, increasing aversion to riskier assets.
“Worries about the global economy are rife,” said Hiroshi Yanagisawa, a dealer in Tokyo at FX Prime Corp., a foreign- exchange unit of trading company Itochu Corp. “The yen is likely to shine as risk appetite wanes.”
The Japanese currency traded at 84.26 yen per dollar as of 9:36 a.m. in Tokyo from 84.20 in New York. It reached 83.60 yen per dollar on Aug. 24, the strongest level since June 1995. The yen was at 106.80 per euro from 106.76. The euro changed hands at $1.2678 from $1.2680.
The franc climbed to a record 1.2852 per euro yesterday before trading at 1.2873 today.
U.S. employers created 15,000 jobs in August after adding 42,000 in July, according to a Bloomberg News survey before today’s data from ADP Employer Services. U.K. house prices fell 0.3 percent in August after a 0.5 percent drop in the previous month, a separate survey showed before tomorrow’s report.
The MSCI World Index declined for a second day yesterday, losing 0.3 percent.
Fed Minutes
The Institute for Supply Management-Chicago Inc. said yesterday its business barometer fell to 56.7 in August, the lowest since November, from 62.3 in July.
Some Federal Reserve officials saw “increased downside risks to the outlook for both growth and inflation” and voiced concern that further shocks would cause “significant slowing in growth,” according to minutes released yesterday of the central bank’s meeting on Aug. 10.
“There’s continued safe-haven flows into the yen and the Swiss franc,” said Win Thin, a senior currency strategist at Brown Brothers Harriman & Co. in New York. The minutes “were very dovish -- rates aren’t heading higher any time soon.”
The yen has climbed 16 percent this year, the biggest increase among its developed-world counterparts, according to Bloomberg Correlation-Weighted Currency Indexes. The currency typically strengthens in times of financial and economic turmoil because Japan’s trade surplus frees the nation from dependence on overseas capital.
Asian Data
Australia’s dollar ended a two-day drop versus the greenback before reports today forecast to show the South Pacific nation’s gross domestic product expanded for a sixth- straight quarter and China’s manufacturing grew in August.
“Faster growth in Australia’s economy and China’s manufacturing are likely to support risk-taking sentiment,” said Yuji Saito, director of the foreign-exchange department at Credit Agricole Corporate and Investment Bank in Tokyo. “This will probably lead to selling of the yen.”
Australia’s economy grew 0.9 percent in the second quarter after expanding 0.5 percent in the previous period, according to the median estimate of economists in a Bloomberg News survey.
China’s Purchasing Managers’ Index rose to 51.5 in August from 51.2 in July, a separate Bloomberg survey showed before the data’s release today. A reading above 50 shows an expansion. China is Australia’s largest trading partner.
The so-called Aussie was at 89.16 U.S. cents from 89.06 yesterday and was at 75.03 yen from 74.99 yesterday.
To contact the reporters on this story: Yasuhiko Seki} in Tokyo at yseki5@bloomberg.net; Catarina Saraiva in New York at asaraiva5@bloomberg.net
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