The euro strengthened to a seven-week high against the dollar after a government report showed German exports increased in June, adding to signs the region’s largest economy is strengthening.
The shared currency advanced versus all most of its major counterparts as the trade surplus widened to 16.9 billion euros ($22.6 billion) from a revised 13.6 billion euros in May. The yen rose for a fifth day against the dollar as the Bank of Japan refrained from boosting it stimulus measures that tend to weaken a currency. Australia’s dollar climbed to its highest level this month after China, its biggest trading partner, reported imports and exports for July that beat economists estimates.
“The euro is being bought back as some of the economic data in the region has been improving,” said Marito Ueda, a senior managing director at FX Prime Corp. (8711), a currency-margin company in Tokyo. “The euro is likely to remain stable.”
The euro rose 0.2 percent to $1.3357 at 8:32 a.m. in London after climbing to $1.3369, the highest since June 19. The 17-nation currency was little changed at 128.44 yen. The yen rose 0.2 percent to 96.14 per dollar after appreciating to 96.10, also the strongest since June 19.
German exports, adjusted for working days and seasonal changes, increased 0.6 percent from May, when they dropped a revised 2 percent, the Federal Statistics Office said. Economists predicted an increase of 0.9 percent, according to a Bloomberg News survey.
Manufacturing in the euro region expanded last month for the first time in two years, London-based Markit Economics said Aug. 1, citing a survey of purchasing managers. German consumer confidence this month will rise to the highest level since August 2007, GfK SE said on July 30.
The euro has strengthened 5.6 percent this year, the best performer of 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar gained 4.2 percent, while the yen tumbled 7.1 percent.
Japan’s currency reversed earlier declines after central bank Governor Haruhiko Kuroda’s board stuck with an April pledge to expand the monetary base by 60 trillion yen to 70 trillion yen per year.
“There may have been some people, especially those overseas, expecting additional BOJ easing,” said Takuya Kawabata, an analyst at Gaitame.com Research Institute Ltd. in Tokyo. “If there were to be additional stimulus, it will likely come after the increase in the sales tax.”
Japan’s current-account surplus was at 336.3 billion yen in June, the Finance Ministry said, trailing the 400 billion yen median estimate in a Bloomberg survey. The balance dropped 20.3 percent from a year ago.
Separate data showed Japanese investors increased their holdings of overseas bonds for a fifth week, purchasing 689.9 billion yen of the securities in the period ended Aug. 2. Those flows help to weaken the yen and are part of a portfolio shift among Japanese investors that Kuroda is trying to encourage with bond purchases that keep yields low.
The currency briefly fell after a report showed Australian employers unexpectedly cut workers last month. Chinese imports gained 10.9 percent in July compared with a year earlier, the General Administration of Customs said, after unexpectedly falling 0.7 percent in June.
“The worst of China slowdown fear may have passed for now, and that’s helping the Australian dollar,” said John Horner, a Sydney-based strategist at Deutsche Bank AG, the world’s biggest currency trader. “There’s been considerable short positioning in the currency, and given the rally we have seen in the past few days, those positions may come under further pressure.” A short position is a bet an asset will decline.
The Australian dollar jumped 0.8 percent to 90.68 U.S. cents after advancing to 90.89, the highest since July 30.