Bloomberg News

Yen Declines as Asian Stock Gains Curb Demand for Safer Assets

September 01, 2011

Sept. 1 (Bloomberg) -- The yen fell against all but one of its major peers, sliding to an almost one-week low against the dollar, as Chinese manufacturing rose in line with forecasts and gains in stocks sapped demand for the safest assets.

Japan’s currency also snapped a two-day advance versus the euro after a government report showed investors in the nation last week made their largest net purchase of overseas stocks in almost a year. The Swiss franc gained versus most of its major peers even after a report showed the economy expanded at the weakest quarterly pace since emerging from a 2009 slump. The euro slid after economic growth in Germany slowed in the second quarter as household spending slumped.

“We’re seeing a bit of a relief rally in risky assets and that undermines the yen,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “In terms of the franc, the euro-zone debt crisis means flows are still fundamentally supportive of the Swissie, which means it has potential for further upside.”

The yen weakened 0.4 percent to 76.94 per dollar at 8:13 a.m. in London, after reaching 77.24, the weakest intraday level since Aug. 26. It declined less than 0.1 percent to 110.20 per euro.

The shared European currency weakened 0.3 percent to $1.4325. Switzerland’s franc was little changed at 1.1581 per euro and appreciated 0.3 percent to 80.81 centimes to the dollar.

Stocks Rise

The MSCI Asia Pacific index of regional shares rose for a sixth day, adding 0.5 percent, heading for its longest streak of gains since January. The measure slumped 8.6 percent last month, the most since May 2010, amid concern global economic growth is slowing as Europe’s sovereign-debt crisis worsens and U.S. economic growth shows signs of faltering.

China’s Purchasing Managers’ Index for manufacturing rose to 50.9 in August, from July’s 29-month low of 50.7, the China Federation of Logistics and Purchasing said in a statement today. That compared with the median estimate of 51 in a Bloomberg News survey of economists. A reading above 50 indicates an expansion.

Japanese investors bought overseas stocks valued at 146.3 billion yen more than they sold in the week ended Aug. 26, data from the Ministry of Finance showed today. That’s the most since last September.

Aussie Dollar

Australia’s dollar advanced versus most of its major peers after the country’s Bureau of Statistics said July retail sales advanced 0.5 percent after declining 0.1 percent in June, curbing prospects the Reserve Bank of Australia will lower its benchmark interest rate. The so-called Aussie rose to 82.33 yen from 82.08 yesterday, and earlier reached 82.67, the strongest since Aug. 5. It bought $1.0705 from $1.0707 yesterday.

“When the market moves to price in a sensible track for the RBA, which is policy being unchanged for a long period, that will boost the Aussie dollar,” said Matthew Johnson, a strategist at UBS AG in Sydney.

Declines in the dollar were limited on speculation the slowdown in the U.S. economy is easing. “The market has priced in the downside risk to the U.S. economy too much,” said Koji Fukaya, chief currency strategist in Tokyo at Credit Suisse Group AG. “My view on the dollar is neutral, and it won’t be a surprise even if it rises.”

The dollar has appreciated 0.8 percent in the past month, according to Bloomberg Correlation-Weighted Currency indexes, which tracks 10 developed-nation currencies.

U.S. Treasury Secretary Timothy F. Geithner will address a Federal Reserve advisory group later today for discussions on the economy and jobs, the Treasury department said in an e- mailed statement.

Geithner and the group of 12 bank chief executives representing each of the Fed’s districts will discuss the “next steps on financial reform implementation,” according to the statement. Fed policy makers will meet on Sept. 20 to more fully debate their options at a two-day meeting that was originally scheduled to last one day.

--Editors: Mark McCord, Nicholas Reynolds

--With assistance from Candice Zachariahs in Sydney, Mariko Ishikawa in Tokyo and Kyoungwha Kim in Beijing, Masaki Kondo in Singapore.

Editors: Jonathan Annells, Benjamin Purvis

To contact the reporters on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net; Garth Theunissen in London gtheunissen@bloomberg.net

To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net


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