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Yen Gains Most in 2 Weeks on Weak Data, Ukraine

Photographer: Ian Waldie/Bloomberg

A shopper walks past a Coles supermarket, operated by Wesfarmers Ltd., in Sydney. The trimmed mean gauge of Australian consumer prices was 2.9 percent in the first quarter from a year earlier, up from 2.6 percent in the previous three months, according to the median forecast of economists in a Bloomberg News survey before the statistics bureau issues the data today. Close

A shopper walks past a Coles supermarket, operated by Wesfarmers Ltd., in Sydney. The... Read More

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Photographer: Ian Waldie/Bloomberg

A shopper walks past a Coles supermarket, operated by Wesfarmers Ltd., in Sydney. The trimmed mean gauge of Australian consumer prices was 2.9 percent in the first quarter from a year earlier, up from 2.6 percent in the previous three months, according to the median forecast of economists in a Bloomberg News survey before the statistics bureau issues the data today.

The yen rose the most in almost two weeks versus the dollar as the U.S. and China reported weaker-than-forecast economic data amid increasing tensions in the Ukraine.

The euro gained the most since April 9 versus the dollar as manufacturing and services in the currency bloc expanded more than economists forecast. New Zealand’s currency advanced in early trading after the central bank raised its official cash rate. The dollar declined for the first time in nine days versus Japan’s currency after sales of new U.S. homes unexpectedly plunged to the lowest level in eight months. Market volatility slid toward a seven-year low.

“The big trigger was the news this morning about escalating tensions in the Ukraine, increasing demand for safe havens,” Mark McCormick, a macro strategist at Credit Agricole SA in New York, said of yen gains. “Macro-wise, the softer data reports in China and U.S. did not help.”

Japan’s currency rose 0.1 percent to 102.54 per dollar at 5 p.m. New York time after gaining 0.4 percent, the most since April 10. The euro advanced 0.1 percent to $1.3817 after rising as much as 0.4 percent to $1.3855. The shared currency was little changed at 141.67 yen.

JPMorgan Chase & Co’s Group of 7 Volatility Index dropped to 6.5 percent, approaching the record low of 5.73 percent reached in June 2007. It is down from a record high 27 percent in October 2008, shortly after the collapse of Lehman Brothers Holdings Inc.

Antipodean Currencies

The New Zealand dollar gained after the central bank raised the rate a quarter-point to 3 percent, its second monthly increase. It was the first developed country to lift borrowing costs since 2011 on March 13 when the Reserve Bank of New Zealand raised its official cash rate to 2.75 percent from 2.5 percent.

The kiwi, as the currency is known, rose 0.3 percent to 86.13 U.S. cents following a 0.2 percent decline. It climbed 4.9 percent this year.

The Aussie declined to the weakest since April 8 after the statistics bureau said the trimmed mean gauge of consumer prices was 2.6 percent in the first quarter from a year ago. That was the same as the previous quarter and less than the 2.9 percent forecast in a Bloomberg News survey.

The Reserve Bank of Australia said this month inflation is expected to stay consistent with its average annual inflation target of 2 percent to 3 percent over the next two years.

The Aussie slid 0.8 percent to 92.91 U.S. cents after dropping 1.1 percent, the biggest decline since March 19.

Ukraine Turmoil

The yen and Swiss franc gained as Ukraine edged closer to a new round of hostilities after the government in Kiev said it’s resuming operations to oust militants from eastern cities and Russia pledged to defend its citizens in the neighboring country.

With international efforts to defuse the crisis grinding to a halt, the U.S. said it will send 600 troops for exercises in four countries bordering Russia, days after NATO bolstered the defense of front-line member states in eastern Europe.

The franc rose 0.2 percent to 88.34 centimes per dollar and 0.1 percent to 1.2207 per euro.

The yen also strengthened as as HSBC Holdings Plc and Markit Economics said their gauge of Chinese manufacturing was 48.3 this month from 48 in March, which was the lowest since July. The reading has been below the level of 50, which indicates contraction, for four months.

Home Sales

The dollar fluctuated versus a basket of peers after new-home sales dropped 14.5 percent to a 384,000 annualized pace, lower than any forecast of economists surveyed by Bloomberg and the weakest since July, Commerce Department data showed today. The median forecast in a Bloomberg survey called for the pace to accelerate to 450,000.

The Fed is in the process of reducing its third round of quantitative easing, in which it buys $55 billion of bonds a month, down from $85 billion last year, to support the economy. It has kept its target for overnight bank lending in a range of zero to 0.25 percent since December 2008.

Fed Chair Janet Yellen said last month that borrowing costs could start rising “around six months” after it stops buying bonds. The central bank’s next policy meeting is April 29-30.

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major counterparts, was little changed at 1,011.45 after climbing to 1,012.09, the highest since April 8.

‘Extremely Positive’

A composite index based on a survey of purchasing managers in the euro-area manufacturing and services industries rose to 54 from 53.1 in March, London-based Markit Economics said. That exceeded the median estimate of 53.0 in a Bloomberg News survey of economists and was the highest in almost three years.

The economic data were “extremely positive and reflective of a broad improvement in euro-zone fundamentals,” said Eimear Daly, head of market analysis at Monex Europe Ltd. in London. “Euro-dollar trade looks like it’s desperately trying to break out of this tight trading range to the upside, but is capped by the threat of ECB asset purchases. If that threat is removed, there is a substantial amount of euro upside momentum that is waiting to be unleashed.”

The euro has gained 5.9 percent in the past 12 months, the best performer after the British pound and the Swiss franc, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The Aussie slumped 11 percent, the worst performer, the yen slipped 4.3 percent and the dollar fell 0.9 percent.

To contact the reporter on this story: John Detrixhe in New York at jdetrixhe1@bloomberg.net

To contact the editors responsible for this story: Dave Liedtka at dliedtka@bloomberg.net Kenneth Pringle, Paul Cox

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