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Yen Weakens as Optimism Global Slump Easing Damps Refuge Demand
http://www.bloomberg.com/apps/news?pid=20601087&sid=a3ltJOkEGhSw&refer=home#
By Ron Harui
April 29 (Bloomberg) -- The yen fell for a second day against the euro after reports showed South Korea had a record current-account surplus and New Zealand’s exports rose, adding to signs the global recession is easing.
The dollar weakened versus 13 of the 16 most-active currencies on speculation governments worldwide are containing the spread of swine flu and tempering its impact on the global economy. The euro advanced for a second day against the greenback before a U.S. report that economists said will show the world’s largest economy shrank at a slower rate last quarter, spurring demand for higher-yielding assets.
“Any signs the pace of contraction in the U.S. economy is easing will probably bolster investor confidence,” said Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington. “This is likely to reduce ‘safe-haven’ demand for the dollar and the yen.”
The yen declined to 127.78 per euro as of 12:40 p.m. in Singapore from 126.79 in New York yesterday. Japan’s currency weakened to 96.91 against the dollar from 96.45. The greenback declined to $1.3183 per euro from $1.3149.
The yen fell 1.8 percent to 54.86 against the New Zealand dollar, lost 1.5 percent to 69.15 to the Australian dollar, and declined 1.4 percent to 13.8761 versus the South Korean won.
The volume of currency trading is likely to be less than normal because of a national holiday in Japan, said Sean Callow, senior currency strategist at Westpac Banking Corp. in Sydney.
Exports Surge
Japan’s currency snapped an eight-day winning streak versus the won after the Bank of Korea said the current-account surplus, the broadest measure of trade, swelled to $6.65 billion last month, almost doubling from February. New Zealand’s exports surged 17 percent from the previous month, the first back-to- back increase since December 2007, the statistics bureau said.
The U.S. economy probably contracted at an annual rate of 4.7 percent in the first quarter, after shrinking 6.3 percent in the final three months of 2008, according to a Bloomberg News survey before the Commerce Department report today.
The Federal Reserve will keep its target lending rate in a range of zero to 0.25 percent, a separate Bloomberg survey showed. Policy makers will announce their decisions on interest rates and goals for purchases of Treasuries and mortgage securities at 2:15 p.m. in Washington.
The Dollar Index, which tracks the greenback against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona weakened for a second day on speculation governments’ efforts will work to limit the swine flu outbreak.
Australian Health Minister Nicola Roxon said today the government is considering measures such as passenger declaration cards to combat any possible outbreak of the disease.
Mexican Cases
The World Health Organization said yesterday Mexico has reported 26 confirmed human cases of infection including seven deaths. The U.S. has reported 65 laboratory confirmed human cases with no deaths, the Organization said.
The WHO’s latest statement “would seem to suggest that this issue is considerably less serious than previously suggested,” said Callum Henderson, global head of currency research at Standard Chartered Bank in Singapore. “The dollar is coming under pressure, equity markets are bouncing and emerging market currencies are coming back.”
The Dollar Index declined 0.3 percent to 84.943.
Stocks Gain
The yen and the dollar also weakened as Asian stocks advanced as a barometer of risk aversion declined. The MSCI Asia-Pacific excluding Japan Index gained 1.6 percent and futures on the Standard & Poor’s 500 Index rose 0.3 percent.
The VIX Index, a measure of market volatility known as Wall Street’s “fear gauge,” declined 1 percent to 37.95 yesterday, indicating traders are becoming more confident about stock- market advances.
“Equity markets and stock futures are in positive territory,” said Masashi Kurabe, head of currency sales and trading at Bank of Tokyo-Mitsubishi UFJ Ltd. in Hong Kong. “This is causing selling of the yen.”
Gains in the euro may be tempered on concern disagreement is deepening among European Central Bank officials on the measures needed to combat the 16-nation region’s recession.
ECB Executive Board member Lorenzo Bini Smaghi yesterday devoted much of a speech to highlighting the difficulties for the central bank of buying assets, suggesting he shares Bundesbank President Axel Weber’s view.
Weber has said he doesn’t favor cutting the benchmark rate below 1 percent and is against buying assets, while others such as Athanasios Orphanides of Cyprus don’t want to rule those options out. Fellow member Juergen Stark will speak today in Siegen, Germany, and Ewald Nowotny will speak in Vienna tomorrow.
“We’re getting somewhat confusing hints from the very large number of ECB members,” Westpac’s Callow said. “They have so many officials and they’re not speaking with one voice. We’re inclined to sell the euro on rallies.”
Investors maintained bets the ECB will cut its 1.25 percent target lending rate at its next meeting on May 7. The implied yield on the three-month Euribor interest-rate futures contract for June delivery was unchanged from yesterday at 1.28 percent. The yield was 1.36 percent a week ago.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a3ltJOkEGhSw&refer=home#
By Ron Harui
April 29 (Bloomberg) -- The yen fell for a second day against the euro after reports showed South Korea had a record current-account surplus and New Zealand’s exports rose, adding to signs the global recession is easing.
The dollar weakened versus 13 of the 16 most-active currencies on speculation governments worldwide are containing the spread of swine flu and tempering its impact on the global economy. The euro advanced for a second day against the greenback before a U.S. report that economists said will show the world’s largest economy shrank at a slower rate last quarter, spurring demand for higher-yielding assets.
“Any signs the pace of contraction in the U.S. economy is easing will probably bolster investor confidence,” said Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington. “This is likely to reduce ‘safe-haven’ demand for the dollar and the yen.”
The yen declined to 127.78 per euro as of 12:40 p.m. in Singapore from 126.79 in New York yesterday. Japan’s currency weakened to 96.91 against the dollar from 96.45. The greenback declined to $1.3183 per euro from $1.3149.
The yen fell 1.8 percent to 54.86 against the New Zealand dollar, lost 1.5 percent to 69.15 to the Australian dollar, and declined 1.4 percent to 13.8761 versus the South Korean won.
The volume of currency trading is likely to be less than normal because of a national holiday in Japan, said Sean Callow, senior currency strategist at Westpac Banking Corp. in Sydney.
Exports Surge
Japan’s currency snapped an eight-day winning streak versus the won after the Bank of Korea said the current-account surplus, the broadest measure of trade, swelled to $6.65 billion last month, almost doubling from February. New Zealand’s exports surged 17 percent from the previous month, the first back-to- back increase since December 2007, the statistics bureau said.
The U.S. economy probably contracted at an annual rate of 4.7 percent in the first quarter, after shrinking 6.3 percent in the final three months of 2008, according to a Bloomberg News survey before the Commerce Department report today.
The Federal Reserve will keep its target lending rate in a range of zero to 0.25 percent, a separate Bloomberg survey showed. Policy makers will announce their decisions on interest rates and goals for purchases of Treasuries and mortgage securities at 2:15 p.m. in Washington.
The Dollar Index, which tracks the greenback against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona weakened for a second day on speculation governments’ efforts will work to limit the swine flu outbreak.
Australian Health Minister Nicola Roxon said today the government is considering measures such as passenger declaration cards to combat any possible outbreak of the disease.
Mexican Cases
The World Health Organization said yesterday Mexico has reported 26 confirmed human cases of infection including seven deaths. The U.S. has reported 65 laboratory confirmed human cases with no deaths, the Organization said.
The WHO’s latest statement “would seem to suggest that this issue is considerably less serious than previously suggested,” said Callum Henderson, global head of currency research at Standard Chartered Bank in Singapore. “The dollar is coming under pressure, equity markets are bouncing and emerging market currencies are coming back.”
The Dollar Index declined 0.3 percent to 84.943.
Stocks Gain
The yen and the dollar also weakened as Asian stocks advanced as a barometer of risk aversion declined. The MSCI Asia-Pacific excluding Japan Index gained 1.6 percent and futures on the Standard & Poor’s 500 Index rose 0.3 percent.
The VIX Index, a measure of market volatility known as Wall Street’s “fear gauge,” declined 1 percent to 37.95 yesterday, indicating traders are becoming more confident about stock- market advances.
“Equity markets and stock futures are in positive territory,” said Masashi Kurabe, head of currency sales and trading at Bank of Tokyo-Mitsubishi UFJ Ltd. in Hong Kong. “This is causing selling of the yen.”
Gains in the euro may be tempered on concern disagreement is deepening among European Central Bank officials on the measures needed to combat the 16-nation region’s recession.
ECB Executive Board member Lorenzo Bini Smaghi yesterday devoted much of a speech to highlighting the difficulties for the central bank of buying assets, suggesting he shares Bundesbank President Axel Weber’s view.
Weber has said he doesn’t favor cutting the benchmark rate below 1 percent and is against buying assets, while others such as Athanasios Orphanides of Cyprus don’t want to rule those options out. Fellow member Juergen Stark will speak today in Siegen, Germany, and Ewald Nowotny will speak in Vienna tomorrow.
“We’re getting somewhat confusing hints from the very large number of ECB members,” Westpac’s Callow said. “They have so many officials and they’re not speaking with one voice. We’re inclined to sell the euro on rallies.”
Investors maintained bets the ECB will cut its 1.25 percent target lending rate at its next meeting on May 7. The implied yield on the three-month Euribor interest-rate futures contract for June delivery was unchanged from yesterday at 1.28 percent. The yield was 1.36 percent a week ago.
