By Yoshiaki Nohara and Ron Harui Nov. 11 (Bloomberg) -- The yen strengthened for a second day against the dollar and euro after Japanese machine orders rose more than forecast, boosting demand for assets in the world’s second-biggest economy. The dollar recovered from a 15-month low against six major U.S. counterparts after U.S. Treasury Secretary Timothy Geithner and World Bank President Robert Zoellick reiterated support for the greenback. Australia’s dollar fell against the yen as slower-than-forecast lending growth in China curbed optimism the region’s economic recovery will be rapid. “The yen is benefiting as the market reacted to the positive machine orders data,” said Koji Fukaya, a senior currency strategist in Tokyo at Deutsche Bank AG. “The data were a surprise. Improving risk appetite may weigh down on the dollar.” The yen rose to 89.60 per dollar as of 6:04 a.m. in London from 89.81 in New York yesterday, and earlier touched 89.29, the highest since Nov. 2. It gained to 134.26 per euro from 134.65. The dollar was at $1.4987 per euro from $1.4993. Australia’s dollar lost 0.3 percent to 83.30 yen and traded at 92.96 U.S. cents from 93.04 cents yesterday. Japan’s currency gained versus 15 of its 16 most-traded counterparts after the Cabinet Office in Tokyo said machine orders, an indicator of business investment in three to six months, rose 10.5 percent in September. The median estimate of 25 economists surveyed by Bloomberg was for a 4.1 percent gain. Japan’s Economic Data Figures due Nov. 16 may show Japan’s economy grew at a 3 percent annualized pace last quarter, according to the median estimate of economists surveyed by Bloomberg. It would be the second-consecutive expansion since the economy emerged from its worst postwar recession and the first since Prime Minister Yukio Hatoyama’s government took power in September. The dollar pared losses after new loans in China dropped more than economists had forecast. That followed data on the nation’s factory output and retail sales that beat estimates. “The Chinese data included weak numbers, limiting risk taking somewhat,” said Hitoshi Asaoka, senior strategist at Mizuho Trust & Banking Co., Ltd. in Tokyo. New loans in China declined to 253.0 billion yuan ($37 billion) last month from 516.7 billion yuan in September, the Beijing-based People’s Bank of China reported today. That was less than 370.0 billion yuan predicated by economists in a Bloomberg News survey. China’s Data “The sharper fall in new loans is a sign that policy is being tightened up, which is a negative as it could take some heat out of the equity market,” said Greg Gibbs, a currency strategist with Royal Bank of Scotland Group Plc, in Sydney. China’s factory output rose 16.1 percent in October, exceeding the median estimate by economists for a 15.5 percent expansion, the statistics bureau reported today in Beijing. A separate report showed retail sales advanced 16.2 percent in October from a year earlier. Economists predicted a 15.7 percent advance. The Dollar Index, which Intercontinental Exchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners, traded at 74.988 from 75.021 in New York yesterday. The gauge earlier touched 74.889, the lowest level since August 2008. Treasury Secretary Geithner said a strong dollar is in the nation’s interest and the government recognizes the importance it plays in the global financial system. ‘Strong Dollar’ “I believe deeply that it’s very important to the United States, to the economic health of the United States, that we maintain a strong dollar,” Geithner told reporters in Tokyo today. World Bank’s Zoellick said at a conference in Singapore today the U.S. dollar’s role as the global reserve currency is secure for some time. Asian Development Bank President Haruhiko Kuroda also said in a Bloomberg Television interview that the dollar will continue to be the world’s reserve currency. “The dollar’s weakness is probably in its final phase over the next few months,” said Burkhard Varnholt, chief investment officer of Bank Sarasin & Co., which manages the equivalent of $79.3 billion as of the end of June. “With the dollar being undervalued by 5 percent to 30 percent against other major trading currencies, the dollar does look fundamentally cheap.” New Zealand’s Dollar New Zealand’s dollar weakened after central bank Governor Alan Bollard today said the “significant” increase in the currency is unlikely to be sustainable. “The rise in the New Zealand dollar over recent months could hinder continued improvement in the external balance,” Bollard said in a semi-annual report on the nation’s financial system. The currency’s current level “is unlikely to be sustainable,” he said. The New Zealand dollar dropped to 74.10 U.S. cents from 74.35 cents. It earlier fell to as low as 74.04 cents. The so- called kiwi dropped 0.8 percent to 66.24 yen. To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.

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