The yen rose against most of its 16 major counterparts before a German report forecast to show a gauge of business confidence dropped for a fifth month, increasing the allure of the Japanese currency as a haven.
The yen touched a six-week high against the euro as Italy prepares to sell bills tomorrow after Germany failed to get bids for 35 percent of the 10-year government bonds that it offered for sale yesterday. The U.S. dollar dropped against the single currency as Asian stocks rebounded and speculation increased that the greenback’s 1.2 percent jump yesterday was excessive.
“The yen is being bought in a flight to quality amid risk- off sentiment,” said Satoshi Okagawa, a Singapore-based senior global-markets analyst at Sumitomo Mitsui Banking Corp., a unit of Japan’s second-largest banking group by market value. “The drop in the euro against the dollar yesterday is prompting a bit of profit taking.”
The yen traded at 103.13 per euro as of 12:40 p.m. in Tokyo, after earlier touching 102.93, the highest since Oct. 10. The Japanese currency climbed 0.3 percent to 77.07 per dollar. The greenback slid 0.3 percent to $1.3382 per euro from yesterday, when it advanced to $1.3320, the highest since Oct. 6.
The MSCI Asia Pacific Index of stocks rose 0.2 percent.
The Ifo institute’s business climate index for Germany dropped to 105.2 in November, the lowest since March 2010, according to the median forecast of economists in a Bloomberg News survey. The Munich-based group will release the data today.
“Europe is headed for a recession,” said Koji Fukaya, chief currency strategist in Tokyo at Credit Suisse Group AG. “Risk aversion and euro weakness are likely to prevail.”
Italy will auction 8 billion euros ($10.7 billion) of bills tomorrow. Yields on Germany’s 10-year debt soared 22.9 basis points, the biggest jump since 1990, amid doubts about the status of the securities as a haven from the region’s crisis.
European Central Bank Governing Council member Ewald Nowotny said Germany’s difficulty in getting bids for its debt auction are an “alarm,” Austria Press Agency reported.
“There will be periods where the euro bounces because the market is so short the euro,” said Thomas Harr, head of Asian currency strategy at Standard Chartered Plc in Singapore. “Part of the risk rallies we’ve seen today, a very modest risk rally, is because we have the Thanksgiving holiday in the U.S. and the market is a bit wary of being too short risk into that.”
U.S. financial markets will be closed today for the national holiday.
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