The yen rose against the dollar and euro as concern the rate of global economic growth is slowing spurred demand for safer assets as the nation approaches its fiscal year end.
The Japanese currency strengthened against the majority its 16 major counterparts amid speculation Japanese companies will repatriate overseas earnings before the end of the fiscal year on March 31. The dollar strengthened earlier after a report showed U.S. factory orders trailed forecasts and the United Kingdom revised first-quarter growth downward. The 17-nation euro erased losses against the dollar after a draft statement from European finance ministers showed governments are preparing to increase rescue funds.
“The yen has been benefiting from repatriation flows,” said Kathy Lien, director of currency research with online currency trader GFT Forex, in New York. “It is fiscal year end and you’re seeing these flows, especially because the yen was at very good levels to take profit. Today is a day of risk aversion.”
The yen advanced 0.3 percent against the dollar to 82.90 at 5:02 p.m. in New York. It added 0.3 percent against the euro to 110.36, after rising as much as 0.8 percent, the most since March 22. The dollar was little changed against the euro at $1.3317 after gaining as much as 0.3 percent.
The euro has risen 0.6 percent this year according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The dollar has depreciated 2.4 percent, while the yen has fallen 10.1 percent, the worst two performances. The New Zealand dollar, up 3.2 percent, and Norway’s krone, up 2 percent, are the best performers in 2012.
Iceland’s krona and the Argentine peso are the biggest losers against the dollar this year among 25 emerging market currencies, according to data compiled by Bloomberg. The krona has lost 3.4 percent and the peso has fallen 1.7 percent. The Hungarian forint and Polish zloty have strengthened the most against the U.S. currency, adding 10.6 and 10.2 percent, respectively.
The South African rand was the worst performer against the dollar today, falling 0.9 percent to 7.6751 per dollar, after commodities fell on signs of slowing demand from China. China’s copper demand based on trade data climbed 26 percent in January and February from a year earlier, down from 30 percent growth in December.
“We are seeing ongoing concerns out of China,” said Eric Viloria, senior currency strategist for Gain Capital Group LLC in New York. “China is slowing down it is just a matter of if it is going to be a hard landing or a soft one.”
Sweden’s krona advanced against all its major peers, rising 0.4 percent to 6.6594 per dollar.
The nation’s consumer confidence index rose to zero from minus 3.2 the previous month, the Stockholm-based National Institute of Economic Research said today. Economists predicted a reading of minus 2, according to the median of 14 forecasts in a Bloomberg survey.
The euro was bolstered by a draft statement showing that European governments are preparing for a one-year increase in the ceiling on rescue aid to 940 billion euros ($1.3 trillion) to keep the debt crisis at bay. German Chancellor Angela Merkel said two days ago her country may back plans for the European Financial Stability Facility and the European Stability Mechanism to run in parallel. Italian, Portuguese and Spanish 10-year government bonds rose.
“If the news on the European ceiling is correct, it looks like it’s more ambitious than investors hoped for,” said GFT’s Lien. “I think at best we were looking at combining the two funds at 500 billion euros. The devil is in the details -- we need to make sure it is an unconditional boost and not one that has too many qualifications for the money to be received by the struggling nations.”
Implied volatility for three-month euro-dollar options, which indicates expected swings in the underlying currencies, fell to as low as 9.74 percent, the least since August 2008.
Bookings for U.S. durable goods, meant to last at least three years, advanced 2.2 percent, less than projected, after a revised 3.6 percent decline the prior month, data from the Commerce Department showed today in Washington. Economists forecast a 3 percent gain, according to the median forecast in a Bloomberg News survey.
“It seems the market is very cautious as there is a bit of concern about the global economy, based off the data we are receiving,” said Charles St-Arnaud, a foreign-exchange strategist at Nomura Holdings Inc. in New York. “Gradually, people are re-pricing global growth.”
Britain’s pound fell after a report showed the economy shrank more than first estimated in the fourth quarter, strengthening the case for the central bank to maintain asset purchases. U.K. gross domestic product dropped 0.3 percent from the previous three months, compared with an earlier estimate of 0.2 percent, data showed today. Bank of England Governor Mervyn King said yesterday he has an open mind on whether more monetary stimulus, or quantitative easing, is needed.
Sterling depreciated 0.4 percent to $1.5889.
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