Euro Approaches Two-Week High Against Yen on Growth; Kiwi Climbs

The euro approached a two-week high against the yen before German reports this week that analysts said will show the region’s largest economy is gaining momentum.

The euro gained versus most of its 16 major peers before a report this week based on surveys of purchasing managers will show services and manufacturing in the bloc expanded this month at the fastest pace in two years, according to analysts in a Bloomberg News survey. The yen weakened after Japan’s trade deficit widened in July. New Zealand’s dollar climbed against all of its 16 major counterparts after services industries expanded and producer prices increased.

“The data could be supportive” of the euro, said Marcus Hettinger, a currency strategist at Credit Suisse Group AG in Zurich. “The PMI should show that the economic recovery is gaining traction in the euro zone.”

The euro rose 0.3 percent to 130.39 yen at 10:48 a.m. in London after advancing to 130.72 on Aug. 15, the highest level since Aug. 6. The common currency was little changed at $1.3337. The yen weakened 0.3 percent to 97.79 per dollar.

Europe’s shared currency will probably trade between $1.32 and $1.34 this week, Credit Suisse’s Hettinger said. The median of analysts’ and strategists’ forecasts compiled by Bloomberg is for the euro to end next month at $1.30 and decline to $1.27 by year-end.

German Growth

German producer prices rose 0.2 percent in July, the first increase in six months, the Federal Statistics Office will say tomorrow, according to a Bloomberg survey. A gauge of manufacturing climbed to 51.1 this month from 50.7 in July and the services index increased to 51.7 from 51.3, an Aug. 22 report from Markit Economics will show separate survey showed. Readings above 50 indicate growth.

The euro has strengthened 5.1 percent this year, the best performer among 10 developed-nation currencies tracked by Bloomberg Correlation Weighted Indexes. The dollar rose 3.9 percent, while the yen slumped 8.9 percent.

A composite index of services and manufacturing output in the euro area rose to 50.9 in August from 50.5 in July, according to the median estimate of 23 analysts in a Bloomberg survey before the report on Aug. 22.

Japan’s imports outpaced exports by 1.02 trillion yen in July, compared with the median estimate for a 773.5 billion yen gap, the Ministry of Finance said in Tokyo. It was the biggest deficit since January, when it was a record 1.63 trillion yen.

‘Yen Negative’

“Japan’s external balance remains deeply in deficit and that’s obviously a yen negative,” said Callum Henderson, Singapore-based global head of currency research at Standard Chartered Plc.

The Bloomberg U.S. Dollar Index, which tracks the currency against 10 major counterparts, was little changed at 1,022.27 after climbing 0.5 percent last week.

The Federal Reserve will release the minutes of its July 30-31 meeting on Aug. 21. Investors and analysts will be looking for clues on when central bankers plan to reduce its $85 billion in monthly asset purchases. Officials will begin to reduce the central bank’s bond buying next month, according to 65 percent of economists surveyed by Bloomberg from Aug. 9-13.

The New Zealand dollar climbed for a fourth day against its U.S. peer, rising 0.4 percent to 81.40 U.S. cents, after being as high as 81.49 cents, the most since May 29. The kiwi jumped 0.6 percent to 79.50 yen.

A gauge of services industries expanded to 58.1 last month, the most since October, from 55.1 in June, Business New Zealand and Bank of New Zealand Ltd. said. Producer input and output prices rose in the second quarter from the previous three months, according to Statistics New Zealand.

Aussie Gains

Australia’s dollar strengthened 0.2 percent to 92.03 U.S. cents after advancing to 92.33, the highest since July 29. It gained 0.3 percent to 89.84 yen.

India’s rupee plunged to a record low, sliding as much as 1.9 percent to 62.825 per dollar before trading at 62.70, according to prices from local banks compiled by Bloomberg. It weakened 1.3 percent last week.

Indonesia’s rupiah fell to a four-year low against the dollar after the nation’s current-account deficit widened to a record last quarter. The rupiah slid 1 percent to 10,533 per dollar after reaching 10,608, the weakest since June 2009.

To contact the reporters on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net; Candice Zachariahs in Sydney at czachariahs2@bloomberg.net

To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net

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