Euro Advances Against Yen Amid Spain Financial Aid Speculation
The euro advanced against the yen for a third day as European Economic and Monetary Affairs Commissioner Olli Rehn signaled that Spain is considering asking for an international bailout to curb borrowing costs.
Europe’s common currency was 0.1 percent from its strongest level in a week against its Japanese counterpart. The yen fell against all of its 16 major peers before a report economists said will show U.S. industrial production rose last month, sapping demand for the currency as a haven. The dollar climbed for a third day against the yen on speculation signs the economic recovery is being sustained will reduce the chances of further monetary easing from the Federal Reserve.
“It would actually be positive” if Spain asked for help, said Geoff Kendrick, head of European currency strategy at Nomura International Plc in London. “That would actually be euro-positive because then you’d have the European Central Bank buying. As long as they do enough buying, it kind of stems contagion.”
The euro rose 0.4 percent to 97.37 yen at 9:52 a.m. London time, after climbing yesterday to 97.47 yen, its strongest level since Aug. 8. It gained 0.1 percent to $1.2334. The dollar appreciated 0.3 percent to 78.94 yen.
“The Spanish government has an open mind on this issue, but no decision has been made,” Rehn said in a Bloomberg Television interview in New York late yesterday. “We stand ready to act if there is a request.” That came after Prime Minister Mariano Rajoy said he would ask the ECB to buy Spanish bonds “if it seems reasonable.”
Industrial production in the U.S. rose 0.5 percent last month after a 0.4 percent gain in June, according to the median forecast of economists in a Bloomberg News survey before today’s data. The New York Fed’s general economic index is predicted to be at 7 in August, a separate survey indicated. Readings greater than zero signal expansion in the region and the last negative reading was in October.
Commerce Department figures yesterday showed July retail sales expanded more than economists forecast.
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