Yen Gains for a Third Day Versus Dollar as Chinese Growth Slows

The yen climbed for a third day against the dollar as a report showed China’s economic growth slowed in the fourth quarter, boosting demand for the Japanese currency as a haven.

The yen rose versus most of its 16 major peers as equities slid. Chinese gross domestic product rose 7.7 percent in the October-December period from a year earlier, the National Bureau of Statistics said in Beijing, compared with 7.8 percent in the third quarter, beating the 7.6 percent gain estimated by analysts in a Bloomberg survey. The dollar slid from an eight-week high against the euro, while Brazil’s real rose to the most in three weeks. The Australian dollar rose the first time in five days. U.S. markets are shut for a public holiday.

“Given the build-up in short positions in the Japanese yen we saw some position squaring over night,” said Jack Spitz, managing director of foreign exchange at National bank of Canada, by phone from Toronto. “I wouldn’t draw any strong conclusions from the data that came out, and I would see it influence more on the Australian dollar.”

The yen climbed 0.1 percent to 104.18 per dollar at 5 p.m. in New York. The dollar was 0.1 percent weaker at $1.3552 per euro after declining to $1.3508, the lowest since Nov. 25. The yen was little changed at 141.18 per euro.

The MSCI Asia Pacific Index of stocks fell 0.2 percent and the Stoxx Europe 600 Index declined 0.1 percent.

The yen has gained 2.3 percent this year, the second-best performer among 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar rose 1.1 percent and the euro weakened 0.4 percent. New Zealand’s dollar paced gains, appreciating 2.6 percent.

Currency Forecasts

“The market is concerned about the outlook for Chinese growth given the need to implement structural reforms,” said Jane Foley, a senior currency strategist at Rabobank International in London. “Risk aversion is clearly a factor and this supported the yen.”

The U.S. currency will rise to 110 yen and strengthen to $1.28 per euro by the end of the year, according to median forecasts of economists compiled by Bloomberg. A Citigroup Inc. gauge last week showed U.S. economic data were surpassing expectations by the most in almost two years.

Federal Reserve policy makers said on Dec. 18 they would cut monthly bond purchases to $75 billion from $85 billion starting in January, with the pace of further reductions dependent on the performance of the economy. Officials are due to next meet on Jan. 28-29.

“Our view on the U.S. is that it will deliver stronger and more consistent growth in 2014 than in the previous three years,” said John Normand, head of foreign-exchange and international-rates strategy at JPMorgan Chase & Co. in London. “The strength of the economy will allow the Fed to taper further. The dollar is likely to advance the most against currencies whose central banks are still easing and where current account positions are poor.”

Jobless Benefits

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major counterparts, gained 0.1 percent to 1,033.15, the highest since Sept. 9.

Economists say American reports on Thursday will show first-time claims for jobless benefits increased last week, while sales of previously owned homes rose for the first time in five months in December.

The British pound fell from a one-week high against the euro before a jobs report this week amid speculation the Bank of England will reduce its threshold for reviewing when to start increasing interest rates.

The unemployment rate declined to 7.3 percent in the three months through November, according to a Bloomberg survey before the data is released on Wednesday. Governor Mark Carney said in August the Bank of England won’t consider raising borrowing costs at least until unemployment drops to 7 percent.

Sterling weakened 0.1 percent to 82.49 pence per euro. The U.K. currency was little changed at $1.6429 after rising and falling as much as 0.2 percent.

To contact the reporters on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net; David Goodman in London at dgoodman28@bloomberg.net

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

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