The yen dropped for a third day, trading at almost 100 per dollar, as a decline in the U.S. jobless rate to a four-year low fueled optimism that growth isn’t faltering and reduced demand for Japan’s currency as a haven. Australia’s currency slid after a report today showed retail sales shrank. The Malaysian ringgit rose to the highest in 1 1/2 years against the dollar after Prime Minister Najib Razak’s coalition was re-elected.
“After the rate cut, it’s clear that if they don’t see economic improvement they’re going to go again,” Fabian Eliasson, vice president of corporate foreign-exchange sales at Mizuho Financial Group Inc. (8411) in New York, said in a telephone interview. The euro “didn’t really fall through any specific levels.”
The 17-nation currency dropped 0.3 percent to $1.3076 as of 5 p.m. New York time. The yen slid 0.3 percent to 99.33 per dollar after touching 99.45, the weakest level since April 25. It plunged to a four-year low of 99.95 on April 11. It was about unchanged at 129.88 per euro.
Markets in Japan and the U.K. were closed today for holidays.
Trading in over-the-counter foreign-exchange options totaled $21 billion, compared with turnover of $36 billion on May 3, according to data reported by U.S. banks to the Depository Trust Clearing Corp. and tracked by Bloomberg. Volume in options on the dollar-yen exchange rate amounted to $7.6 billion, the largest share of trades at 31 percent. Dollar versus Chinese currency options were the second most-actively traded, at $4.5 billion, or 22 percent.
Dollar-yen options trading was 31 percent below the average of the past five Mondays at a similar time in the day, and Chinese yuan trading rose more than 500 percent, according to Bloomberg analysis.
The yuan fell in Hong Kong’s offshore market by the most in 15 months and the onshore spot rate retreated from a 19-year high as China stepped up scrutiny of cash transfers from abroad. The yuan weakened 0.18 percent in Shanghai to close at 6.1667, the steepest decline since December, according to the China Foreign Exchange Trade System.
In Australia, retail sales unexpectedly fell 0.4 percent in March after gaining 1.3 percent the previous month, a government report showed today. Economists surveyed by Bloomberg predicted a gain of 0.1 percent.
There’s a 51 percent chance that the Reserve Bank of Australia will lower its benchmark 3 percent rate when it meets tomorrow, Bloomberg calculations based on overnight-index swap rates indicate.
“We think they are going to cut, but at the end of the day, we’re still in this really broad dollar range,” Peter Gorra, chief dealer in New York at BNP Paribas SA, said in an interview on Bloomberg Television’s “Lunch Money” with Julie Hyman. “The market is saturated now. They’re long Aussie, they’ve had it on for years, they’re looking at other opportunities, be it Mexico, Canada and other emerging markets.”
The so-called Aussie weakened 0.6 percent to $1.0254.
The Malaysian ringgit gained as much as 2.3 percent to 2.9625 per dollar, the strongest since September 2011. Najib’s coalition extended its 55-year rule, giving him a mandate to continue his economic reforms and deliver $444 billion of infrastructure and other investments by 2020.
The euro dropped after Draghi said, during a speech in Rome, “we will be looking at all the data that arrives from the euro-area economy in the coming weeks and, if necessary, we are ready to act again.” The ECB last week reduced its key interest rate to an all-time low, and Draghi said policy makers had an open mind on a negative deposit rate.
“Draghi’s shift in language on the deposit rate last week was a clear signal that the ECB is prepared to act on the deposit rate should conditions warrant,” said Brian Daingerfield, a currency strategist at Royal Bank of Scotland Group Plc’s RBS Securities unit in Stamford, Connecticut.
The yen depreciated beyond 99 per dollar on May 3 for the first time in a week after a U.S. Labor Department report showed employment picked up more than forecast and the jobless rate declined to 7.5 percent. Payrolls expanded by 165,000 workers last month following a revised 138,000 increase in March that was larger than first estimated.
“That at the very least is keeping dollar-yen supported,” Geoffrey Yu, a senior currency strategist in London at UBS AG, said of last week’s U.S. employment report. “Risk is slightly adjusting.”
The dollar has gained 1.1 percent over the past six months, according to Bloomberg Correlation-Weighted Indexes that track 10 developed market currencies. The euro has risen 3.8 percent.
The yen has slumped 21 percent, the worst performer on the indexes, in anticipation of expanded stimulus from the Bank of Japan that culminated in the April 4 decision to double monthly bond purchases in pursuit of a 2 percent annual inflation target.
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