BLBG : Yen Declines as Obama Signals Economic Recovery Has Started
Sept. 15 (Bloomberg) -- The yen declined against the dollar after President Barack Obama said job losses are “bottoming out” and the U.S. economy looks to be growing again, dimming demand for Japan’s currency as a refuge.
The yen fell most against high-yielding currencies such as the South African rand as the MSCI World Index stayed near an 11-month high. The euro slid versus the dollar after a report showed German investor confidence rose less than analysts forecast. The pound advanced as a report signaled the U.K. housing market may have stabilized. Norway’s krone was little changed after Prime Minister Jens Stoltenberg’s Labor party-led coalition was re-elected.
“If the more resilient stock backdrop is maintained and we get better data globally, then risk appetite will continue to be boosted and those yen crosses will continue to move relatively significantly,” said Jeremy Stretch, a senior currency strategist at Rabobank International in London.
The yen traded at 91.10 per dollar as of 10:05 a.m. in London, from 90.94 yesterday in New York. Japan’s currency was at 132.89 per euro, from 132.94 yesterday. The euro, fell to $1.4588, from $1.4618 yesterday, when it strengthened to the highest level since Dec. 18.
Obama, speaking to Bloomberg News one year after the bankruptcy of Lehman Brothers Holdings Inc. sent financial markets into turmoil, also warned against cutting off government aid “so soon that the recovery doesn’t take flight.” Writedowns and credit losses at the world’s biggest financial institutions since the start of 2007 have climbed to more than $1.6 trillion, data compiled by Bloomberg show.
Retail Sales
U.S. retail sales probably rose 1.9 percent in August, after declining 0.1 percent the previous month, a report will show today, according to the median forecast of 73 economists in a Bloomberg survey.
The euro dropped after the ZEW Center for European Economic Research said its index of investor and analyst expectations rose to 57.7 this month. Economists forecast a reading of 60, according to a Bloomberg News survey of economists.
The European Central Bank kept its key rate at a record low of 1 percent on Sept. 3 to boost spending. The Frankfurt-based central bank is also providing lenders with unlimited cash for 12 months and is buying covered bonds to counter the slump.
The pound gained to $1.6606, from $1.6583 yesterday, and 87.88 pence per euro, from 88.17 pence after the London-based Royal Institution of Chartered Surveyors said more surveyors reported a gain in British home values than a drop for the first time in two years.
King Address Lawmakers
The Bank of England last week said it won’t expand its 175 billion pound ($291 billion) asset-purchase program and kept its benchmark interest rate at 0.5 percent. Governor Mervyn King is addressing lawmakers in London today.
“The RICS data indicates the U.K. housing market may have stabilized, suggesting the economy is on the mend,” said Takashi Kudo, director of foreign-exchange sales at NTT SmartTrade Inc., a unit of Nippon Telegraph & Telephone Corp. in Tokyo. “This is likely to be positive for risk appetite, thereby leading to selling of the yen and buying of the pound.”
Norway’s krone gained as much as 0.2 percent versus the euro and was at 8.6341, from 8.6376 yesterday. It was at 5.9113 per dollar, from 5.9089 yesterday.
Stoltenberg’s Labor Party and its partners, the Socialist Left and the Center Party, secured 86 seats out of 169 seats in parliament, after 99.9 percent of the votes were counted. It makes Stoltenberg, 50, the first Norwegian premier to be re- elected since 1993.
Dollar Index
The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, rose for a second day.
The index rose 13 percent from Sept. 15, 2008, to March 5, 2009, as investors sought the safety of U.S. assets following the collapse of Lehman. When the panic receded, the index fell 14 percent, to 76.793 today, as investors focused on deficits in the U.S. and interest rates.
U.S. authorities have rescued, taken over or helped to sell Bear Stearns Cos., Merrill Lynch & Co., American International Group Inc., Fannie Mae, Freddie Mac and Citigroup Inc.
The euro climbed to a nine-month high this week after falling to a 2 1/2-year low of $1.2330 in the month after Lehman went bankrupt. The yen is down 1.8 percent from a 13-year high of 87.13 to the dollar in January.
