Euro Rises Against Yen Before Industrial Output; Kiwi Advances

The euro rose for the first time in three days versus the yen before a report that economists said will show euro-area industrial production rebounded, supporting the central bank’s decision this month not to add stimulus.

The shared currency was 0.2 percent from a six-week high versus the dollar as European Central Bank President Mario Draghi addressed the European Union parliament in Strasbourg. The dollar rose against the yen as investors weigh U.S. economic reports before next week’s Federal Reserve meeting. Australia’s dollar fell after unemployment rose to match the highest level since 2009. New Zealand’s currency climbed as the central bank said rate increases may be needed.

“Euro has been solid,” said Junichi Ishikawa, an analyst at IG Markets Securities Ltd. in Tokyo. “The euro selling has abated as the concern for disinflation in the region and additional ECB easing have receded.”

The euro rose 0.4 percent to 141.79 yen at 8:57 a.m. London time after dropping 0.5 percent over the past two days. The 17-nation shared currency was little changed at $1.3779 after climbing yesterday to $1.3811, the highest since Oct. 29. The dollar advanced 0.5 percent to 102.91 yen.

The ECB kept its interest-rate targets unchanged this month. Draghi is in Strasbourg two days after saying it’s now “crucial” for “other actors” to complement the central bank’s monetary policy actions by carrying out changes at the regional and national level to enable a sustainable recovery.

Euro ‘Hanging’

Industrial production in the euro area grew 0.3 percent in October from 0.5 percent the prior month, according to the median estimate of economists in a Bloomberg News survey before the European Union’s statistics office releases the data today.

“The euro’s a little high, but by God it’s hanging up there,” Dan Fuss, fund manager at Loomis Sayles & Co., which had $194 billion in assets as of Sept. 30, said in an interview today in Tokyo. “Nonetheless, I’m neutral.”

The euro has gained 9.5 percent in the past year, the biggest advance among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar has risen 3.3 percent, while the yen is the worst performer with an 18 percent drop.

“It’s government policy to have the currency lower,” Fuss said of the yen. “Don’t fight government policy.”

The Federal Open Market Committee will probably begin reducing $85 billion in monthly bond buying at the Dec. 17-18 meeting, according to 34 percent of economists surveyed on Dec. 6 by Bloomberg, an increase from 17 percent in a Nov. 8 poll.

Fed Outlook

Fed policy makers have pledged to keep the benchmark interest rate near zero at least as long as unemployment exceeds 6.5 percent. Data from last week showed the jobless rate dropped to a five-year low of 7 percent in November.

U.S. retail sales increased 0.6 percent in November from October, a Bloomberg economist survey showed before a Commerce Department report today.

Congressional negotiators yesterday won Republican endorsements for a budget accord to ease automatic U.S. spending cuts for two years, remove the risk of a government shutdown and cut the deficit by $23 billion.

“The positive jobs data in the U.S. and the resolving of the headwinds surrounding the U.S. fiscal situation support Fed to reduce stimulus,” said Etsuko Yamashita, the chief economist in New York at Sumitomo Mitsui Banking Corp. “Retail sales are expected to be strong.”

Australian Jobs

Australia’s unemployment rate climbed to 5.8 percent in November from 5.7 percent a month earlier, the statistics bureau said in Sydney today. That matches the highest level since June 2009. The number of people employed rose by 21,000, beating economists’ estimates for a 10,000 increase.

The Aussie fell to 90.41 U.S. cents from 90.48 yesterday, when it dropped 1.1 percent. It is down 13 percent over the past 12 months.

New Zealand’s dollar rose 0.3 percent to 82.79 U.S. cents and gained 0.7 percent to 85.18 yen.

The nation’s central bank kept its key rate at a record-low 2.5 percent today while saying the current level of stimulus is becoming unnecessary. The rate will probably need to rise 2.25 percentage points over the next 2 1/4 years, Reserve Bank of New Zealand Governor Graeme Wheeler said today.

To contact the reporters on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net; Kevin Buckland in Tokyo at kbuckland1@bloomberg.net

To contact the editor responsible for this story: Garfield Reynolds at greynolds1@bloomberg.net

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