The euro was within 0.5 percent of a one-month high after a draft statement from European finance ministers showed governments are preparing to increase rescue funds when they meet tomorrow.
Europe’s common currency was poised for its first quarterly gain against the U.S. dollar since June before data forecast to show unemployment in Germany, the region’s biggest economy, remained at the lowest in more than two decades. The yen rose against the greenback as Asian stocks extended a global rout, supporting demand for haven assets.
“It has been a factor supporting the euro and has helped the currency recover,” Greg Gibbs, a foreign-exchange strategist at Royal Bank of Scotland Group Plc in Sydney, said of the euro area’s rescue fund. “It has helped the sense of calm in European bond markets over recent weeks.”
The euro fetched $1.3324 as of 10:26 a.m. in Tokyo from $1.3317 yesterday in New York. The 17-nation currency touched $1.3386 on March 27, the strongest since Feb. 29. It was at 110.27 yen from 110.40 yesterday. The yen rose 0.2 percent to 82.75 per dollar.
A draft statement written for European finance ministers showed the region’s governments are preparing for a one-year increase in the ceiling on rescue aid to 940 billion euros ($1.3 trillion) to keep the debt crisis at bay. German Chancellor Angela Merkel said on March 26 her country may back plans for the European Financial Stability Facility and the European Stability Mechanism to run in parallel.
Germany’s unemployment rate probably held at 6.8 percent in March from previous month, the lowest since the nation’s reunification, according to median estimate of economists surveyed by Bloomberg News. The number of people out of work probably fell 10,000 from February, a separate poll shows.
Business confidence in the nation rose to an eight-month high in March, a private report this week showed. The Munich-based Ifo institute’s business climate index, based on a survey of 7,000 executives, increased to 109.8 from a revised 109.7 in February.
“The German economy is doing relatively well; unemployment should drop today, inflation is moderating and this week’s Ifo was solid,” Emma Lawson, a Sydney-based currency strategist at National Australia Bank Ltd., wrote in a research note today. “We do believe the approval for the rescue package will go ahead tomorrow, and this may create more support for the euro in the interim.”
The euro has risen 0.6 percent this year, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-market currencies. The dollar has weakened 2.4 percent, while the yen has fallen 10 percent, the worst two performances. The New Zealand dollar’s 3.3 percent gain is the best performance in 2012.
The MSCI Asia Pacific Index of stocks fell 0.6 percent following a 0.8 percent decline in The MSCI World Index of shares yesterday.
“The yen has now become more linked up with equity moves,” said RBS’s Gibbs. “I’m more inclined to be buying than selling at these levels.”
The 82 level “looks like quite a good technical support for dollar-yen,” he said. The yen last touched 82 per dollar on March 23, when it climbed to as high as 81.98. A support level is an area on a chart where orders to buy a security may be clustered.
Demand for the yen was also supported amid speculation the country’s companies will repatriate overseas earnings before the end of the fiscal year on March 31.
“There is demand to buy the yen at the fiscal year-end and that is capping gains in dollar-yen,” said Kazuo Shirai, a trader at Union Bank NA in Los Angeles. “I think the yen will grind weaker if it stays around 82 per dollar level next month.”