The yen fell against most of its major counterparts, weakening to the lowest level in nine months versus the Australian dollar, as investors sought higher-yielding assets.
The U.S. dollar rose for a fourth straight day versus the yen as two-year Treasury note yields increased to an eight-month high versus rates on comparable Japanese securities, burnishing the appeal of dollar-denominated debt. American consumer borrowing increased in December for a third consecutive month, and stocks advanced.
“This is a risk move, and the yen always gets hurt with people flying into equities,” said Brian Taylor, chief currency trader at Manufacturers & Traders Trust Co. in Buffalo, New York. “The two-year interest-rate differential between the U.S. and Japan is also really making the dollar attractive.”
The yen weakened 0.2 percent against the dollar to 82.33, from 82.18 yen on Feb. 4, at 5 p.m. in New York. It touched 82.47, matching the weakest since Jan. 28. The yen fell 0.2 percent to 111.82 versus the euro, from 111.62 on Feb. 4. The greenback was little changed versus the euro at $1.3583 after earlier touching $1.3509, the strongest level since Jan. 21.
The Japanese currency fell as much as 0.5 percent to 83.71 per Australian dollar, the weakest since May 13, before trading at 83.43 yen.
The yield spread between two-year U.S. and Japanese government securities touched 54 basis points, or 0.54 percentage point, the widest since June. The yen fell against 11 of its 16 most-traded peers as the Standard & Poor’s 500 Index advanced 0.6 percent.
U.S. consumer credit climbed by $6.1 billion to $2.41 trillion after increasing a revised $2.02 billion in November, according to Federal Reserve data issued today in Washington. Economists projected a $2.4 billion increase in the measure of credit card debt and non-revolving loans, according to the median forecast in a Bloomberg News survey. Borrowing peaked at $2.58 trillion in July 2008.
Yields on U.S. 10-year notes increased as much as six basis points to 3.69 percent, the highest level since May 4. Two-year note yields rose as much as five basis points to 0.79 percent, the highest since June 4.
“Where U.S. yields are, dollar-yen should be higher and so we just need to take out whatever selling interest is at 82.50, which for right now looks quite formidable,” said Brian Dolan, chief strategist at FOREX.com, a unit of online currency trading firm Gain Capital in Bedminster, New Jersey.
Sweden’s krona gained against all of its major peers, strengthening 0.3 percent against the dollar to 6.4599. The Swedish government had a budget surplus of 29.9 billion kronor ($4.6 billion) in January, the National Debt Office said today.
Norway’s krone dropped against all 16 of its most-traded counterparts as oil futures touched the lowest level in more than a week, $87.18 a barrel in New York. The currency declined for a fourth day against the greenback as data showed Norwegian manufacturing production fell 1 percent in December, compared with a 0.5 percent gain forecast in a Bloomberg survey.
The krone weakened 0.4 percent against the dollar to 5.7797, from 5.7558 on Feb. 4.
The pound rose earlier against most peers on speculation the Bank of England will be forced to raise interest rates to contain inflation. The two-year gilt yield added four basis points to 1.55 percent after touching 1.63 percent, the most since February 2009.
Bank of England
The implied yield on short-sterling futures contracts for December 2011, which anticipates where short-term British interest rates will be, rose two basis points to 1.72 percent as traders added to bets for higher borrowing costs. The Bank of England’s Monetary Policy Committee meets on Feb. 10.
A report this week is forecast to show U.K. manufacturing expanded for an eighth month in December. Output rose 0.4 percent after a 0.6 percent gain in November, the Office for National Statistics will say on Feb. 10, according to a Bloomberg survey.
On the same day, the Bank of England is forecast to keep its bond-purchase plan at 200 billion pounds ($322 billion) and leave benchmark rates at a record low 0.5 percent, according to all 62 economists in a Bloomberg News survey.
The pound appreciated 0.2 percent to 132.62 yen and was little changed at 84.34 pence per euro. It traded at $1.6109, compared with $1.6111 on Feb. 4.
Canada’s dollar dropped from almost a two-year high against its U.S. counterpart as crude oil, the nation’s biggest export, fell. The currency, nicknamed the loonie for the image of the aquatic bird on the C$1 coin, weakened 0.4 percent to 99.09 cents per U.S. dollar. It touched 98.32 cents on Feb. 4, the strongest level since May 2008.
The Mexican peso fell 0.3 percent to 12.0075 per dollar.