The yen fell against most its major counterparts as Bank of Japan officials signaled they’ll keep acting to stem its strength to spur economic growth.
The greenback gained and Canada’s dollar slid after more Americans filed jobless claims last week and a regional manufacturing gauge dropped, increasing demand for the perceived safety of U.S. debt. The pound and Swedish krona climbed as investors bet the Bank of England and the Riksbank will refrain from further monetary easing.
“Yen dovishness is here to stay, and they are the only major central bank that is continuing to ease right now,” said Aroop Chatterjee, a currency strategist at Barclays Plc in New York. “Further yen weakness is likely, but probably at a slower pace than we have seen in February and March. U.S. economic prospects were looking extremely strong back then, and now they are looking much more mixed.”
The yen depreciated 0.4 percent to 81.61 per dollar at 5 p.m. New York time and touched 81.74, the weakest level since April 10. The Japanese currency weakened 0.5 percent against the euro to 107.21, after earlier gaining 0.1 percent. The euro rose 0.1 percent to $1.3138 after falling 0.4 percent earlier.
The Bank of Japan is “committed” to monetary easing, Governor Masaaki Shirakawa said yesterday in a speech in New York. Deputy Governor Kiyohiko Nishimura said the central bank is ready to implement additional easing if necessary.
Japan had a trade deficit of 82.6 billion yen ($1 billion) in March, versus a revised surplus of 29.4 billion yen in the previous month, data showed today. The prediction in a Bloomberg News survey was for a 223.2 billion-yen shortfall.
The yen has weakened 8.3 percent this year, the worst performer among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar has lost 2.1 percent, and the euro has fallen 0.6 percent.
The euro was recovering against the yen after touching an eight-week low of 104.63 on April 16. There is support at 105.71, the 200-day moving average, and resistance at yesterday’s high of 106.90, according to data compiled by Bloomberg. A resistance level is an area on a chart where analysts anticipate orders to sell a currency will be grouped, and a support level is an area where they expect buy orders to be clustered.
Brazil’s real dropped against the dollar as the central bank lowered interest rates and indicated more cuts may be on the way. Bank President Alexandre Tombini reduced the benchmark Selic rate by three-quarters of a percentage point yesterday to 9 percent. Policy makers signaled slowing inflation and weaker global growth may allow more reductions.
The real slid as much as 0.8 percent to 1.8935 per dollar, the weakest level since November, before trading at 1.8805.
The Swedish krona gained versus all of its 16 most-traded counterparts tracked by Bloomberg. It advanced 0.2 percent to 6.7303 per dollar and appreciated 0.1 percent versus the euro to 8.8413. The krona has rallied since Sweden’s Riksbank kept its main interest rate unchanged yesterday at 1.5 percent. Four of 18 economists surveyed by Bloomberg had forecast a cut.
The Dollar Index added as much as 0.3 percent to 79.828 before trading at 79.570 as Treasury 10-year notes yielded below 2 percent for a fifth straight day.
Manufacturing in the Philadelphia region expanded at a slower pace in April, the Federal Reserve Bank of Philadelphia’s general economic index showed. The gauge fell to 8.5, the lowest level since January, from 12.5 in March.
U.S. Trade Partners
Canada’s dollar and Mexico’s peso tumbled after claims for unemployment benefits in the U.S., their biggest trade partner, fell to 386,000 in the week ended April 14, from a revised 388,000 the previous week, Labor Department figures showed.
The Canadian currency declined against all of its most-traded counterparts, falling 0.5 percent to 99.57 cents per U.S. dollar. Mexico’s peso fell 0.1 percent to 13.1980.
Investors should bet New Zealand’s currency will fall against the Canadian dollar as the nation’s central banks diverge in policy outlooks, BNP Paribas SA said. The Bank of Canada said this week higher interest rates “may become appropriate,” while the Reserve Bank of New Zealand has warned that a strong currency may delay rate boosts.
The kiwi, as the South Pacific currency is nicknamed, traded at 81.02 Canadian cents today in New York, up 0.2 percent. Investors should enter the trade at current levels with the target of 78 cents, Michael Sneyd, a currency strategist at BNP Paribas in London, wrote to clients today.
The euro fluctuated after Citigroup Inc.’s Michael Saunders wrote in a client note today that credit-rating companies will probably downgrade France over the next two to three years regardless of whether President Nicolas Sarkozy or his Socialist challenge, Francois Hollande, wins the election. Italy, Spain, Ireland and Portugal also face potential downgrades, he wrote.
The pound gained 0.1 percent to 81.84 per euro and rose 0.2 percent to $1.6052.
The Bank of England’s nine-member Monetary Policy Committee voted 8-1 in seeking no change to the 325 billion-pound asset-purchase target, according to minutes of the April 4-5 meeting released yesterday. Adam Posen, a policy maker who voted for more quantitative easing in March, ended his push for further stimulus.