The yen weakened from a four-month high against the euro as Bank of Japan Governor Haruhiko Kuroda said the economy was recovering moderately, signaling officials will maintain their stimulus.
Japan’s currency fell for the first time in four days against the dollar after policy makers left their bond-buying program unchanged. The krona advanced as Sweden’s jobless rate declined more than economists predicted. Sterling reached a 19-month high against the euro after Bank of England Governor Mark Carney said U.K. interest rates may rise.
“Sentiment is yen negative,” said Marc Chandler, an analyst in New York at Brown Brothers Harriman & Co. “The broader development is this divergence between dollar bloc and continental European currencies.” Dollar bloc refers to currencies including Canada, New Zealand and Australia.
The yen weakened 0.3 percent to 138.17 per euro at 5 p.m. New York time, after rising yesterday to the strongest level since Feb. 6. It slipped 0.3 percent to 102.04 per dollar. The 18-nation common currency declined 0.1 percent to $1.3540.
The median of analysts’ and strategists’ predictions compiled by Bloomberg is for the yen to weaken to 107 in the fourth quarter and 108 by the end of March 2015.
Hedge-fund managers and other large speculators added to bets the yen will weaken against the dollar. The difference in the number of wagers on a decline in Japan’s currency, compared with those on a rise -- so-called net shorts -- was 82,162 contracts on June 10, the most since April 8, according to data from the Commodity Futures Trading Commission.
Net bets on a decline in the euro increased to 57,185 contracts, the most since May 2013, the data showed.
The rand pared declines, pulling back from a three-month low against the dollar, after Standard & Poor’s raised the outlook on South Africa’s debt while cutting its credit rating. The currency weakened less than 0.1 percent to 10.6777 per dollar, after dropping as much as 1.3 percent.
“Market reaction is blunted by the fact that a risk of a downgrade had largely been priced in,” Razia Khan, London-based regional head of research for Africa at Standard Chartered Bank Plc, said in an e-mailed note. “Some had even spoken of the likelihood of a two-notch downgrade from S&P. From this perspective, the assigning of a stable outlook to South Africa’s rating by S&P is positive news, relatively speaking.”
The jobless rate in the Nordic region’s largest economy fell to 8 percent in May from 8.7 percent a month earlier, Statistics Sweden in Stockholm said today. That’s less than the 8.4 percent median estimate of economists in a Bloomberg survey.
The Swedish krona climbed 0.8 percent to 8.9976 per euro and strengthened 0.7 percent to 6.6447 per dollar.
The U.K.’s AAA credit rating outlook was revised to stable from negative by Standard & Poor’s. Sterling gained as much as 0.4 percent to 79.73 pence per euro, the strongest level since November 2012, before trading at 79.82 pence. It rose 0.2 percent to $1.6968.
“There’s already great speculation about the exact timing of the first rate hike and this decision is becoming more balanced,” Carney said at a gathering at the Mansion House in the City of London financial district yesterday. “It could happen sooner than markets currently expect.” The BOE’s key interest rate has been at 0.5 percent since March 2009.
Sterling futures trading reached a record 337,633 contracts today, CME Group Inc. said on its website.
The pound has strengthened 9.1 percent in the past 12 months, the best performer among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen weakened 7 percent, while the euro gained 1.6 percent.
The BOJ will continue to expand the monetary base at a pace of 60 trillion yen ($588 billion) to 70 trillion yen per year, it said in a statement today in Tokyo, in line with estimates of all 33 economists in a Bloomberg News survey.
Policy makers in Tokyo will maintain their easing policy until the 2 percent inflation target is achieved and is stable, Kuroda said in Tokyo after the bank’s decision. The BOJ is halfway to its target, he said.
“People for the long term do believe that the yen is going to weaken, though I don’t think it’s going to happen as fast as everybody was anticipating,” Sireen Harajli, a strategist at Mizuho Bank Ltd. in New York, said by phone today. “The Bank of Japan doesn’t seem like it’s close to announcing any kind of new measures right now. The numbers in Japan have been coming in fairly well.”
Forty-two percent of economists forecast the BOJ will boost stimulus in October, which displaced July as the most popular pick for action, according to a Bloomberg survey conducted June 3-6. Fifty-eight percent see BOJ action by the end of this year, dropping from 75 percent last month.
China’s yuan posted the biggest weekly rally since December 2011 on speculation the central bank will tolerate gains after the trade surplus widened.
The onshore yuan rose 0.63 percent this week to close at 6.2107 per dollar in Shanghai, China Foreign Exchange Trade System prices show. It climbed as much as 0.27 percent today to a two-month high of 6.2018. The currency dropped 2.5 percent this year in Asia’s worst performance.