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Yen Tumbles Versus Majors After BOJ Easing; Dollar Gains on Data

The yen fell against all but one of its 16 most-traded counterparts as the Bank of Japan added to its monetary stimulus program amid better-than-forecast U.S. data that renewed appetite for higher-yielding assets.

The Japanese currency declined for a third week against the dollar, touching a six-month low yesterday, after hiring in the U.S. increased more than forecast. Norway’s krone rallied after Norges Bank said it wouldn’t fight currency appreciation. The dollars of New Zealand and Australia gained versus the yen after Chinese manufacturing accelerated. The Dollar Index rose for a second week before the presidential election on Nov. 6.

“What’s making the yen move is the better U.S. data and the fact that risk aversion in Europe continues to decline,” Adam Myers, director of foreign-exchange market strategy in London for at Credit Agricole SA, said yesterday. The BOJ easing “was not enough of a surprise. We may be due for a snap-back, as the markets have become very sanguine.”

The yen fell 1 percent to 80.43 per dollar this week in its longest losing streak since March. It touched 80.68 yesterday, the weakest level since April 27. The Japanese currency declined 0.2 percent to 103.24 versus the euro. The shared currency dropped for a second week against the dollar, trading 0.8 percent to $1.2835.

U.S. stock markets were closed Oct. 29 and 30, and bond markets shut beginning noon on Oct. 29, as Hurricane Sandy caused as much as $50 billion in economic damage as it barreled into the East Coast.

The BOJ added 11 trillion yen ($137 billion) to increase its fund to 66 trillion yen while a separate credit-loan program will stay at 25 trillion yen. The central bank will also offer unlimited loans to banks to boost credit demand.

Payrolls Report

The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six U.S. trading partners, gained for a second week. It strengthened 0.6 percent to 80.56, touching an almost two-month high on Nov. 2 after the nonfarm payrolls report. The gauge is weighted 57.6 percent to movements in the euro.

A net 171,000 workers were added to payrolls after a 148,000 gain in September that was more than first estimated, Labor Department figures showed yesterday in Washington, compared to the median forecast of 91 economists surveyed by Bloomberg called for an advance of 125,000. The jobless rate rose to 7.9 percent from 7.8 percent as more people entered the labor force.

Presidential Election

With the presidential race four days away, a Washington Post/ABC News national tracking poll released yesterday showed President Barack Obama and Republican challenger Mitt Romney essentially tied, with 49 percent of likely voters supporting Obama and 48 percent with Romney.

Romney has said he disagrees with the Federal Reserve’s measures to stimulate the economy and would replace Chairman Ben S. Bernanke, who last week reaffirmed the central bank would purchase $40 billion of debt a month to depress borrowing costs and spur growth.

“The Bernanke Fed is a consideration for short-dated rates in the short-dated bond market,” said Credit Agricole’s Myers. “What the foreign-exchange market cares about is if there is a clean sweep in terms of getting control of Congress. If that were to come true, no matter who wins, the foreign-exchange market would take that quite positively.”

Norway’s Krone

Norway’s krone rose against all of its major counterparts as the nation’s central bank kept its benchmark interest rate on hold on Oct. 31 and said it won’t buy foreign currency to stem currency appreciation.

“One of the biggest headwinds against near-term krone strength has been averted,” Erica Blomgren, chief strategist at SEB AB in Oslo, said Oct. 31.

The krone appreciated 0.6 percent to 5.7381 per dollar. The currency advanced 1.4 percent to 7.3638 per euro, its biggest weekly gain since Aug. 10.

The currencies of New Zealand and Australia gained as official figures Oct. 31 showed that a Chinese manufacturing gauge based on a survey of purchasing managers climbed to 50.2 in October from 49.8 in September, the first expansion in three months. That matched the median estimate of economists surveyed by Bloomberg News.

New Zealand’s dollar, know as the kiwi, rose to a six-month high of 66.78 against the yen and the strongest in a month versus the dollar at 82.89 U.S. cents.

The Aussie rose to a one-month high of $1.0420 and gained 0.6 percent to 83.12 yen.

Euro ‘Rotation’

The euro traded at its lowest level in a month against the dollar after a report showed the region’s manufacturing contracted last month and as European governments pressed Greece to make deeper spending cuts.

With Greece pleading for a 31 billion-euro ($40 billion) aid payout in November and facing a sixth year of recession in 2013, euro finance ministers said unfreezing loans for the country required more efforts in Athens to rein in the budget deficit and deregulate the economy.

“For the euro, it’s more rotation out of the currency because it’s already moved a fair amount,” Noel Hebert, chief investment officer at Bethlehem, Pennsylvania-based Concannon Wealth Management, which oversees about $250 million, said Oct. 29. “It doesn’t feel like people are overanxious to rush back into the dollar, given the election and the uncertainty going on at the end of the year.”

The euro weakened 0.7 percent this week, the second-worst performance after the yen’s 0.8 percent drop among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar rose 0.3 percent.

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