The yen weakened against the dollar for a second day after Japanese Finance Minister Jun Azumi indicated that Group of Seven nations remain supportive of intervention to address extreme currency moves.
The euro fell, ending two days of gains against the greenback, as Spanish Budget Minister Cristobal Montoro said the nation faces difficulties in accessing capital markets. Brazil’s real gained the most in a week as the central bank sold currency swap contracts. Canada’s dollar fluctuated after the nation’s central bank kept rates unchanged while continuing to signal future increases.
“We’ve heard some jawboning from some of the finance ministers on concern over the strength of the yen,” said Mary Nicola, a New York-based currency strategist at BNP Paribas SA. “Any sort of intervention would lead to a very short-lived spike in the dollar-yen.”
The yen dropped 0.5 percent to 78.75 per dollar at 5 p.m. in New York after strengthening to 78.11. Japan’s currency was 0.1 percent weaker 98.06 per euro. The 17-nation currency fell 0.4 percent to $1.2452.
The Dollar Index, which tracks the greenback against six U.S. trading partners, was 0.4 percent higher at 82.769. The gauge is weighted 57.6 percent to movements in the euro.
Canada’s currency was 0.1 percent stronger at C$1.0381.
Governor Mark Carney said “some modest withdrawal of the present considerable monetary policy stimulus may become appropriate.” The Bank of Canada kept its benchmark overnight rate unchanged at 1 percent.
Investors looking to add to bets the greenback will rise against the Canadian dollar should do so if the U.S. currency strengthens above C$1.0425, MacNeil Curry, head of foreign- exchange and interest-rates technical strategy in New York at Bank of America Corp., wrote in a note to clients. The Canadian dollar may weaken to C$1.0658, the lowest since October, as traders reverse bets on strength.
Brazil’s real appreciated 1.8 percent to 2.0225 per dollar, the biggest intraday gain since May 25.
The central bank sold 20,300 out of the 40,000 currency swap contracts it offered, according to a statement, in an attempt to stem the currency’s decline. The real has lost 8.3 percent this year versus the dollar, the largest drop among the major currencies tracked by Bloomberg.
After reaching its weakest level against the dollar on March 15, the yen had strengthened as much as 7 percent. Japan’s Azumi said he told finance ministers a strong yen was depressing the nation’s stock market and damaging its economy by making exports more expensive.
“I said at today’s conference that I want G-7 members to share this agreement, which states that excessive and disorderly moves of foreign exchange rates would have a bad effect on economic activities and finances and that we will closely consult and cooperate appropriately in the currency market,” Azumi said to reporters after the conference call. “There were no oppositions from G-7 members about this statement of mine.”
Bank of England policy makers will keep their main interest rate at a record low 0.5 percent on June 7, according to all 55 economists in a Bloomberg survey. The central bank will hold its asset-purchase plan at 325 billion pounds ($499 billion), according to the median forecast of a separate Bloomberg survey.
The pound was little changed at $1.5383 versus the dollar. It reached $1.5269 on June 1, its lowest since Jan. 17.
The Swedish krona ended two days of gains, declining 0.5 percent to 7.2061 per dollar.
Australia’s dollar climbed 0.1 percent to 97.42 U.S. cents even after the Reserve Bank of Australia lowered borrowing costs by 0.25 percent to 3.5 percent. Swaps data compiled by Bloomberg had shown a more than 40 percent change of a 0.5 percent reduction.
Spain called for outside support for the first time to battle the financial crisis.
“What the risk premium tells us is that as a state and as Spain overall we have a problem when it comes to going to the markets,” Spain’s Montoro said. “What that risk premium shows is that the door of the markets isn’t open to Spain.”
“The Spanish are crying out and saying that they don’t need an entire bailout and it’s not as big as people are making it look,” said Andrew Wilkinson, chief economic strategist at Miller Tabak in New York. “Investors will be warmed by the prospects of central banks doing what is needed.”
The euro has declined 3.6 percent in the past six months, the worst performer among 10 developed-nation currencies, according to Bloomberg Correlation-Weighted Indexes. The dollar gained 4.6 percent, and the yen appreciated 3 percent.
To contact the reporters on this story: Joseph Ciolli in New York at firstname.lastname@example.org; Allison Bennett in New York at email@example.com
To contact the editor responsible for this story: Dave Liedtka at firstname.lastname@example.org