BLBG: Yen Falls Against High-Yield Currencies as Chinese Exports Rise
By Matthew Brown
March 10 (Bloomberg) -- The yen declined against all of its major counterparts after a report showed that Chinese exports rose the most in three years, renewing investor demand for higher-yielding assets.
The Japanese currency was at its lowest level against the Australian dollar in almost two months. The euro fell to the least versus the New Zealand dollar in almost a year after a report showed German exports unexpectedly slumped in January, adding to evidence the European economic recovery is struggling to take hold. China’s customs bureau said exports rose 45.7 percent in February from a year earlier.
“The Chinese figures were good, which is supporting a recovery scenario outside of Europe and the U.K.,” said Henrik Gullberg, a currency strategist at Deutsche Bank AG in London. “The data out of Europe has been weak and that is preventing the euro from appreciating.”
The yen weakened 1 percent to 63.89 per New Zealand dollar, the weakest since Feb. 23, as of 8:09 a.m. in New York. It dropped 0.7 percent against the Australian dollar to the least since Jan. 21. The Japanese currency traded at 123.00 per euro from 122.35 yesterday and weakened 0.5 percent to 90.39 per dollar. The euro dropped 0.1 percent to $1.3609.
“Conditions will continue to improve on the risk sentiment front and the emerging-market currencies and commodity-linked currencies are likely to outperform over the coming weeks,” said Lee Hardman, a foreign-exchange strategist at Bank of Tokyo Mitsubishi UFJ Ltd. in London.
Dollar Bullishness
Investors are the most bullish on the U.S. dollar since the collapse of Lehman Brothers Holdings Inc. in September 2008, a survey of Bloomberg users showed. The greenback will rise over the next six months, according to respondents in the Bloomberg Professional Global Confidence Index.
Sentiment toward the dollar climbed to 66.39 this month from 55.72 in February, according to the survey. The measure is a diffusion index, meaning a reading above 50 indicates Bloomberg users expect the dollar to strengthen.
The recovery in Europe, Japan and the U.K. is lagging the U.S., emerging markets and the rest of Asia.
The German Federal Statistics Office said sales abroad plunged 6.3 percent from the previous month. Economists had forecast a 0.5 percent increase.
A Japanese government report today showed machinery orders dropped 3.7 percent in January from the previous month, indicating subdued appetite among the nation’s companies to ramp up capital spending.
U.K. Economy
The pound fell for a third day against the dollar and the euro as a report from the Office for National Statistics showed output in the U.K. contracted 0.4 percent in January from December, when it increased 0.5 percent. Economists had predicted a 0.3 percent expansion.
“Sterling remains weak amid ongoing concerns over debt ratings and political dynamics,” said Jeremy Stretch, a senior currency strategist at Rabobank International in London.
The pound dropped against 15 of its 16 of its most-traded peers, including a 0.4 percent decline to $1.4934 and a 0.5 percent slide to 91.10 pence per euro.
Bank of England officials last week left the benchmark interest rate unchanged at 0.5 percent and put the asset- purchase program on hold for a second month. Central bank Governor Mervyn King said the economy faces a “gradual recovery” from the recession and has pledged to aid the pickup by buying more bonds if needed. Policy maker Adam Posen told Sky News yesterday growth “will pick up from here.”
Fitch Outlook
The euro fell to the lowest level against the Australian dollar since 1997 after Fitch Ratings said yesterday that Greece’s prospects in the next six to nine months are less certain than over the short term.
The U.S. dollar weakened against New Zealand’s dollar for a fourth day and traded near a two-month low against Canada’s currency after Federal Reserve Bank of Chicago President Charles Evans said yesterday he expects the central bank to hold its target rate at a record low for the next “three or four meetings.”
Interest-rate futures on the Chicago Board of Trade today showed a 41 percent chance U.S. policy makers would raise the target rate by at least a quarter-percentage point to 0.5 percent by September. The odds were 30 percent a week ago.
The greenback dropped to 70.63 U.S. cents per New Zealand dollar from 70.29 cents. It earlier touched 70.75 cents, the weakest since Feb. 17. The U.S. currency fetched C$1.0257 from C$1.0261 in New York yesterday, when it reached C$1.0236, the lowest since Jan. 15.
To contact the reporters on this story: Matthew Brown in London at mbrown42@bloomberg.net
