The yen rose against most major counterparts, strengthening from a four-year low against the dollar, as investors sought safety.
The euro pared an earlier gain versus the dollar as German investor confidence rose less than forecast. The yen fluctuated versus the dollar after falling for the past four days, weakening beyond 100 for the first time since April 2009. Australia’s dollar slid as a forecast of slower growth fanned bets the central bank will cut interest rates, and Sweden’s krona weakened after consumer prices fell more than forecast.
“We’re seeing some general range trading now that we have hit 100,” Charles St-Arnaud, a foreign-exchange strategist at Nomura Holdings Inc. in New York, said in a phone interview. “It seems like investors are still looking for more signs of what will drive the next leg of yen weakness. The dollar-yen will be higher than 100 most of the time going forward.”
The yen gained as much as 0.6 percent to 101.26 per dollar before trading at 101.77 at 10:14 a.m. New York time. It touched 102.15 yesterday, the weakest since October 2008. The Japanese currency rose 0.1 percent to 132.02 per euro. The 17-nation currency was little changed at $1.2974 after earlier climbing as much as 0.4 percent to $1.3029.
“The market has been waiting for the break of the 100 level for some time, and we can now see some profit-taking and consolidation just below 102,” said Bernd Berg, a currency strategist at Credit Suisse AG in Zurich, referring to the yen-dollar exchange rate. “The market will test the 102 level over the next couple of days.”
South Korea’s won rose the most in two weeks as global funds bought South Korean shares after an unexpected increase in U.S. retail sales boosted investor appetite for emerging-market assets. The currency appreciated 0.5 percent, its biggest gain since April 30, to 1,106.41 before trading at 1,106.44.
The Australian dollar fell to an 11-month low versus the greenback as the government’s forecast of slower growth fanned bets the Reserve Bank of Australia will cut borrowing costs further to support the economy. It lowered its cash rate target a quarter-percentage point last week to 2.75 percent.
Australia’s gross domestic product will probably decelerate in the 12 months starting July 1, the government said today when releasing the federal budget.
“An easing in austerity was not enough to offset lower growth projections, increasing speculation that the RBA’s recent interest rate cut might be followed by another, in turn weighing on the Aussie,” Camilla Sutton, head of currency strategy at Bank of Nova Scotia, wrote today in a client note.
The Australian dollar fell 0.3 percent to 99.26 U.S. cents and touched 98.96 cents, the weakest since June 12.
The Swedish krona dropped against most major peers after a report showed consumer prices fell an annual 0.5 percent in April, more than the 0.2 percent decline forecast in a Bloomberg survey of economists. It was the lowest reading in the headline inflation gauge since November 2009.
“The market now has to price in a higher probability of a cut by the Riksbank,” Kasper Kirkegaard, a senior currency strategist at Danske Bank A/S in Copenhagen, said by telephone. “All in all, the move in the krona seems fair.”
The krona fell 0.5 percent to 8.6211 per euro after touching 8.6547, the weakest level since Jan. 28.
The euro rose as much as 0.4 percent against the greenback before the ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, rose to 36.4 this month from 36.3 in April. The median estimate in a Bloomberg survey of economists called for a reading of 40.
The shared currency has gained 2.3 percent this year, the third-best performer among 10 developed-nation currencies tracked by Bloomberg Correlation Weighted Indexes. The dollar is the biggest winner, advancing 4.2 percent, while the yen is down 13 percent.
Trading in over-the-counter foreign-exchange options totaled $13 billion as of 10:05 a.m. in New York, compared with $34 billion yesterday, according to data reported by U.S. banks to the Depository Trust Clearing Corp. and tracked by Bloomberg. Volume in options on the dollar-yen exchange rate amounted to $2.6 billion, the largest share of trades at 21 percent. Australian dollar-U.S. dollar options were the second most actively traded at $1.9 billion, or 15 percent.
Dollar-yen options trading was 61 percent below the average for the past five Tuesdays at a similar time in the day, according to Bloomberg analysis.