Dollar, Yen Gain as Global Slowdown Spurs Haven Bid
The dollar and yen strengthened versus most of their major counterparts as signs of an economic slowdown in Asia and Europe boosted demand for haven assets.
The yen gained against the higher-yielding Australian and New Zealand dollars after a Chinese gauge indicated that factory output contracted for two consecutive months for the first time since 2009. Japan’s Tankan report showed pessimism among the nation’s large manufacturers deepened. The U.S. currency touched the strongest level in three weeks versus the euro before data today that may indicate the jobless rate in the 17-nation region climbed to a record in August.
“The global economic outlook has become increasingly uncertain, deteriorating market sentiment,” said Kengo Suzuki, a currency strategist in Tokyo at Mizuho Securities Co., a unit of Japan’s third-largest bank by market value. “Investors are buying safe-haven currencies such as the yen and dollar.”
The dollar was little changed at $1.2857 per euro at 8:19 a.m. London time, after reaching $1.2804, the strongest since Sept. 11. The yen advanced 0.1 percent to 77.91 against the greenback. Japan’s currency traded 0.1 percent stronger at 100.12 per euro. It added 0.2 percent to 80.76 yen per Australian dollar and gained 0.2 percent to 64.62 against the New Zealand currency.
A gauge of China’s factory output was 49.8 last month from 49.2 in August, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today in Beijing. Separate data from HSBC Holdings Plc and Markit Economics on Sept. 29 showed manufacturing shrank for an 11th month.
Japan’s Tankan index was minus 3 in the three months ended Sept. 30, compared with minus 1 in the previous quarter, the nation’s central bank said today. A negative figure means pessimists outnumber optimists.
In the euro area, the jobless rate climbed to 11.4 percent in August, according to the median estimate of economists in a Bloomberg News survey before the European Union’s statistics office releases the report. The figure would be the highest in data compiled by Bloomberg going back to 1990.
The yen jumped 7.4 percent in the past six months, the most among the 10 developed-nation currencies tracked by Bloomberg Correlation Weighted Indexes. The dollar added 0.2 percent and the euro lost 3.9 percent, the biggest drop after the Swiss franc.
Japan’s currency tends to strengthen during periods of financial and economic turmoil because the nation’s current- account surplus means it isn’t reliant on foreign capital. The dollar benefits because it is the world’s reserve currency.
The difference in the number of wagers by hedge funds and other large speculators on a decline in the U.S. Dollar Index compared with those on a gain -- so-called net shorts -- was 3,970 on Sept. 25 compared with a net long position of 4,896 a week earlier, according to figures from the Washington-based Commodity Futures Trading Commission.
“The market was getting short U.S. dollar last week,” Greg Gibbs, a senior currency strategist at Royal Bank of Scotland Group Plc in Singapore, wrote today in an e-mailed note to clients. “They will be looking to square that up further to start this week with fears rising over Europe rising and the state of the global economy.”
The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six U.S. trading partners, was little changed at 79.896. The gauge climbed earlier to 80.147, the highest since Sept. 11.
Australia’s dollar touched the lowest in more than a year against its New Zealand counterpart before the larger nation’s Reserve Bank holds a policy meeting tomorrow.
Interest-rate swaps data compiled by Bloomberg show traders see an 87 percent chance that RBA policy makers will lower the overnight cash-rate target by 25 basis points from 3.5 percent. That contrasts with the median forecast of economists in a Bloomberg survey that predicts officials will keep the benchmark unchanged for a fourth-straight meeting.
The so-called Aussie dollar touched NZ$1.2469, the lowest since September 2011, before trading little changed at NZ$1.2500.
Sweden’s krona is the best performer in a basket of developed-market peers since June, with a 3.11 percent advance, about twice that of the second-place Norwegian krone. The median of economist estimates compiled by Bloomberg is for Sweden’s economy to grow 1.2 percent this year even as the euro region contracts.
Strategists raised their estimates for the currency against the dollar by about 8 percent in less than three months as the central bank signaled that it sees no need to curb the krona’s advance. That’s in contrast to the dollar, which fell last quarter as Federal Reserve Chairman Ben S. Bernanke’s open-ended stimulus plan debased the currency, and the euro, which weakened amid a third year of debt turmoil.
“The krona can go a lot further,” John Taylor, the founder and chief executive officer of New York-based hedge fund FX Concepts LLC, which manages $3 billion, said in a Sept. 27 interview. “Sweden has the wind behind it because Bernanke is making the dollar go down and Europe keeps having these traumas.”
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