Dollar Advances Toward Two-Week High Versus Yen on Signs of U.S. Recovery
The dollar rose toward a two-week high against the yen before U.S. reports forecast to show jobless claims fell and consumer confidence improved, boosting demand for assets in the world’s largest economy.
The greenback strengthened against all of its 16 major counterparts after Federal Reserve Bank of Atlanta President Dennis Lockhart said an increase in Treasury yields indicates growing confidence the U.S. recovery will gain strength. South Korea’s won fell for a second day on speculation overseas investors are pulling money out of the nation’s stock and debt markets due to concern inflation will quicken.
“The U.S. economy is undoubtedly recovering albeit slowly,” said Daisuke Karakama, a market economist in Tokyo at Mizuho Corporate Bank Ltd., Japan’s second-largest publicly traded lender. “I expect the yen to weaken against the dollar.”
The dollar gained to 82.53 yen as of 2:13 p.m. in Tokyo from 82.36 in New York yesterday, when it climbed to 82.67, the strongest since Jan. 28. The U.S. currency climbed to $1.3698 per euro from $1.3733. The yen traded at 113.04 per euro from 113.09, after falling to 113.24, the weakest since Jan. 28.
The number of Americans filing first-time claims for jobless benefits declined to 410,000 last week from 415,000 the previous week, according to a Bloomberg News survey before today’s report. The Thomson Reuters/University of Michigan’s preliminary index of consumer sentiment rose to 75 in February from 74.2 in January, a separate Bloomberg survey showed before tomorrow’s data.
‘Firm Manner’
“Economies in the U.S. and most of the world appear to be recovering in a firm manner,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan’s largest currency broker. “The dollar is being bought and the yen is being sold.”
Quickening growth means the Fed probably won’t need to buy more bonds after finishing its $600 billion program of purchasing Treasury securities in June, Lockhart said yesterday in Atlanta.
“If I take my base-case forecast, which continues the moderate rate of growth through 2011 and for 2012, I am not sure it would be necessary” for the Fed to make more purchases, he said. “On my base case, it would not be necessary.”
Won Falls
The won fell against all of its major counterparts after exchange data showed foreign funds cut their holdings of the nation’s stocks for a third day. The Kospi stock index declined for a third day.
“The equity market is not good and foreigners are continuing to sell stocks,” said Andy Kim, a Seoul-based currency trader at Standard Chartered First Bank Korea Ltd., a unit of Standard Chartered Plc. “Foreigners are also selling bonds. Inflation concern could be one of the factors.”
The won declined 0.5 percent to 1,114.88 per dollar, extending its weekly loss to 1.1 percent.
Australia’s dollar fell for a second day after a government report showed full-time employment dropped in January, spurring concern the economy is growing too slowly to prompt the central bank to raise interest rates.
The so-called Aussie weakened as swap traders reduced expectations for how much borrowing costs will rise over the next year.
“A drop in full-time employment will probably temper the markets in terms of the Aussie dollar rising higher,” said Jonathan Cavenagh, a currency strategist in Singapore at Westpac Banking Corp. The overall job data “suggest the labor market is in a pretty good shape, at least on the surface.”
Australia’s dollar fell to $1.0071 from $1.0124 yesterday, when it dropped 0.2 percent. The currency weakened 0.2 percent to 83.20 yen.
To contact the reporters on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.
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