Bloomberg News

Yen Gains as Stock Losses, German Data Spur Refuge Demand

June 08, 2012

Yen Gains as Stock Losses, German Export Data Spur Refuge Demand

Shipping containers await export in Hamburg. German exports, adjusted for work days and seasonal changes, fell 1.7 percent from March, when they gained 0.8 percent, the Federal Statistics Office in Wiesbaden said today. Photographer: Jochen Eckel/Bloomberg

The yen gained versus all its major counterparts as data showed German exports fell in April amid concern the European debt crisis is hurting the region’s economy, boosting demand for haven currencies.

The Dollar Index rebounded from a near one-week low as Asian stocks dropped even after China cut interest rates for the first time since 2008 to stimulate growth. The yen maintained a weekly loss versus the dollar on speculation the Bank of Japan (8301) will debate overhauling its asset-buying program next week. Australia’s dollar fell after data showed the nation posted a trade deficit for a fourth month.

“China’s rate cut wasn’t enough to boost risk appetite,” said Masakazu Sato, a foreign exchange adviser for Gaitame Online Co., a foreign exchange margin company in Tokyo. “The situation in Europe hasn’t changed. The yen and dollar are being bought in a bid for safety.”

The yen gained 1 percent to 99.07 per euro as of 7:03 a.m. in London from the close yesterday in New York. The Japanese currency added 0.5 percent to 79.22 per dollar, still set to lose 1.5 percent this week. The 17-nation euro declined 0.4 percent to $1.2506.

The Dollar Index (DXY), which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners, gained 0.3 percent to 82.513. It touched 81.911 on June 7, the lowest level since May 28. The MSCI Asia Pacific Index of shares lost 1.3 percent.

German Exports

German exports, adjusted for work days and seasonal changes, fell 1.7 percent from March, when they gained 0.8 percent, the Federal Statistics Office in Wiesbaden said today. Economists forecast a drop of 0.7 percent, according to the median of 14 estimates in a Bloomberg News survey. Imports plunged 4.8 percent.

“The ground in Europe is still shaking and there are still problems there,” said Alex Sinton, director for institutional foreign exchange at Australia & New Zealand Banking Group Ltd. (ANZ) “The euro has had a corrective rally. It should come under further pressure.”

The euro may fall in the coming days to $1.2464, its 200- hour moving average, Sinton said, citing trading patterns.

The euro has declined 3.7 percent over the past six months, making it the worst performer among 10 developed-nation currencies, according to Bloomberg Correlation-Weighted Indexes. The dollar gained 3.5 percent and the yen appreciated 1.3 percent.

China’s one-year deposit rate and one-year lending rate will both drop by a quarter percentage point effective today, the People’s Bank of China said in a statement yesterday.

Chinese Economy

Industrial output in China in the first five months of the year probably grew 10.8 percent from a year earlier, according to the median estimate in a Bloomberg News survey of economists ahead of a report tomorrow. That would be the slowest growth in year-to-date output since November 2009. Consumer prices are projected to have risen by 3.2 percent in May from a year earlier, smaller than the 3.4 percent increase reported in April and below the government’s 2012 target of 4 percent.

“China is cutting interest rates not because it wants to, but because it has to,” said ANZ’s Sinton. “The economic landscape there is such that they need to cut those rates. There will be further cuts to come.”

In South Korea, the won slid after the central bank held off from altering borrowing costs for a 12th-straight month. Governor Kim Choong Soo said that while today’s rate decision was “unanimous,” the board discussed various follow-up measures in preparation for changes in the economic situation.

The won slipped 0.3 percent to 1,175.30 per dollar.

BOJ Bond Purchases

Gains in the yen were limited against the dollar as BOJ Governor Masaaki Shirakawa and his board prepare to meet June 14-15 after the central bank missed targets for bond purchases twice in May. The disruptions to the central bank’s program coincide with increasing pressure from Japanese lawmakers for Shirakawa to step up efforts to support the economy, which is forecast to slow after it strengthened last quarter.

Federal Reserve Chairman Ben S. Bernanke refrained from signaling additional steps the U.S. central bank might take to spur growth, when he testified before Congress yesterday. The policy-setting Federal Open Market Committee meets June 19-20.

“If the Fed or the BOJ does make a notable change then it would be for the BOJ to ease policy further,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. (WBC) in Sydney. It would help “underpin the dollar versus the yen,” he said.

The so-called Aussie weakened against 13 of its 16 most- traded peers after a government report today that showed the nation’s imports outpaced exports by A$203 million ($200 million), from a revised A$1.28 billion deficit in March.

The Australian dollar fell 0.5 percent to 98.44 U.S. cents, and lost 1 percent to 77.97 yen.

To contact the reporters on this story: Monami Yui in Tokyo at myui1@bloomberg.net; Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net


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