April 22 (Bloomberg) -- The yen gained for the first time in five days after traders failed to push the currency through 100 per dollar, a level it last weakened to four years ago.
The euro fluctuated versus the dollar amid signals from European Central Bank policy makers that interest-rates may be cut to boost economic growth. The yen slid earlier versus the greenback after the Group of 20 offered no opposition last week to the Bank of Japan’s monetary-stimulus policies. Sterling rose amid bets data this week will show the U.K. avoided falling back into a recession last quarter.
“A lot of the time, people wait to see the move before they then get involved,” Douglas Borthwick, a managing director and head of foreign exchange at Chapdelaine FX, a unit of Tullett Prebon Plc, in New York, said in a telephone interview. “Certainly 100 would be a level whereby if you see that move through 100, then you’d see a lot more interest to get involved in the trade.”
The yen gained 0.3 percent to 99.23 per dollar at 5 p.m. in New York after depreciating earlier to 99.90, the weakest since it declined to a four-year low of 99.95 on April 11. Japan’s currency added 0.2 percent to 129.66 per euro. The euro gained 0.1 percent to $1.3066 after appreciating 0.5 percent earlier to $1.3117 and falling to $1.3015.
The Japanese currency last weakened to 100 per dollar on April 14, 2009.
“It’s a bit of profit-taking, not just short-term, but also some of the structural longer-term names as well,” Geoffrey Yu, a senior currency strategist at UBS AG, said of the yen’s gains in a telephone interview from London. Asset managers are “not exactly sold on the story yet that we’re going to get a lot of flows out of the Japanese investors.”
UBS still forecasts the yen will reach 110 to the dollar by year-end, Yu said.
Norway’s krone slid versus 15 of its 16 most-traded peers after central-bank Governor Oeystein Olsen said low inflation was a concern, adding to bets the bank will lower interest rates.
The krone lost as much as 0.6 percent to 7.6472 per euro, the weakest level since June, before trading at 7.6374, down 0.5 percent. It declined 0.4 percent to 5.8450 per dollar.
Mexico’s peso reached a two-week low against the dollar as a report showed retail sales in the nation dropped 2.6 percent in February from a year earlier, the most in more than three years, damping the outlook for economic expansion.
The peso depreciated as much as 0.7 percent to 12.3524 per dollar, the weakest since April 5, before trading at 12.2743, down 0.1 percent.
The ECB may cut interest rates if data show a need for it, Executive Board Member Joerg Asmussen said April 20 on a panel in Washington. ECB President Mario Draghi said April 19 the economic situation in the 17-nation euro area hasn’t improved since the bank’s last meeting on April 4. Bank Governing Council Member Jens Weidmann, who also heads Germany’s Bundesbank, said April 19 the ECB would only lower borrowing costs if economic data worsen. The benchmark rate is currently 0.75 percent.
Europe’s shared currency rallied earlier today versus the dollar after Giorgio Napolitano was sworn in to a second term as Italy’s president. He pledged to break the political gridlock that’s left the country without a new government eight weeks after inconclusive elections.
“The euro would have been trading higher the back of this development in Italy,” Kiran Kowshik, a currency strategist at BNP Paribas SA in London, said in a telephone interview. “The only thing holding it back are these numerous comments from ECB officials that certainly easier policy, lower rates, is a possibility if the data warrant.”
Nippon Life Insurance Co., Japan’s largest life insurer, said it may buy more foreign debt and cut holdings of long-term domestic securities if yields in Japan stay low. Japanese investors were net sellers of foreign bonds during the week ended April 12 according to figures based on reports from designated major investors released by the Ministry of Finance last week.
“These Japanese outflows will begin,” Kowshik said. “Clearly it’s not been seen in the weekly portfolio flow data, but we think that is something that will come through.”
Futures traders increased bets last week the yen will weaken versus the greenback, according to data from the Commodity Futures Trading Commission. The difference in the number of wagers by hedge funds and other large speculators on a decline compared with those on a gain -- so-called net shorts -- was 93,411 on April 16, compared with 77,697 a week earlier.
G-20 finance chiefs and central bankers meeting on April 19 praised the measures taken by the BOJ this month aimed at increasing inflation to 2 percent within two years. They signaled Japan’s focus on supporting domestic demand was strong enough to allow them to ignore the side effects of a weaker yen.
The BOJ is scheduled to deliver its next policy statement in Tokyo on April 26.
“We’re not expecting any new measures at this one,” Brian Kim, a foreign-exchange strategist at Royal Bank of Scotland Group Plc’s RBS Securities unit in Stamford, Connecticut, said in an interview on Bloomberg Television’s “Lunch Money” with Julie Hyman. “We think at this point the Bank of Japan is pretty content with what they’ve done, and we are looking for further weakness.”
Sterling gained versus the dollar and euro before the Office for National Statistics releases a report later this week that a Bloomberg survey forecast will show Britain’s GDP expanded 0.1 percent in the first quarter after shrinking 0.3 percent in the previous three months.
The pound gained 0.3 percent to 85.45 cents per euro and rose 0.4 percent to $1.5290.
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