By Yoshiaki Nohara Feb. 22 (Bloomberg) -- The yen fell against all of its major counterparts as the sharpest jump in Asian stocks since November damped demand for the Japanese currency as a refuge. The yen reached a two-week low versus the euro before a report forecast to show German business confidence climbed to the strongest since July 2008. The dollar dropped against higher-yielding currencies on prospects the lack of U.S. job growth will keep Federal Reserve Chairman Ben S. Bernanke from raising the central bank’s key interest rate. “A little bit of risk appetite is coming back into the market,” said Phil Burke, chief dealer for global foreign exchange and rates at JPMorgan Chase & Co. in Sydney. Other currencies “will be supported” against the yen. The yen dropped to 124.88 per euro as of 6:48 a.m. in London from 124.58 in New York on Feb. 19, after touching 125.24, the lowest since Feb. 4. The yen was at 91.61 per dollar from 91.52. The greenback retreated to $1.3629 per euro from $1.3613 on Feb. 19, when it touched $1.3444, the highest since May 18. Japan’s Nikkei 225 Stock Average jumped 2.7 percent. The MSCI Asia Pacific Index of regional shares rose 2.5 percent, heading for its biggest advance since Nov. 30. German business confidence rose to 96.1 this month from 95.8 in January, according to the median estimate of economists in a Bloomberg News survey before the Munich-based Ifo institute releases the data tomorrow. Home Sales Sales of new U.S. homes rose 3.8 percent in January, following a 7.6 percent decline in December, according to the median forecast in a Bloomberg News survey of economists before the Commerce Department report on Feb. 24. Bookings for goods meant to last several years rose 1.5 percent last month, a separate survey showed before the data’s release on Feb. 25. “Our forecasts look for upside risks relative to the consensus for the IFO survey in particular,” Mitul Kotecha, head of global foreign-exchange strategy for Credit Agricole CIB in Hong Kong, wrote in a note. “For the most part the data will show improvement and play for a further improvement in risk appetite.” Australia’s dollar rose 0.3 percent to 82.51 yen after touching 82.82 yen, the highest since Jan. 21. It gained to 90.07 U.S. cents from 89.88 cents. New Zealand’s dollar strengthened to 64.32 yen from 64.01 yen and fetched 70.22 U.S. cents from 69.95 cents. Benchmark interest rates of 3.75 percent in Australia and 2.5 percent in New Zealand compare with as low as zero in the U.S. and 0.1 percent in Japan, making the South Pacific nations’ assets attractive to investors seeking higher returns. Dovish Comments The dollar fell against 11 of its 16 major counterparts before Bernanke delivers his semi-annual report on the economy and interest rates to House and Senate panels on Feb. 24-25. New York Fed President William Dudley indicated on Feb. 19 that policy makers need to focus now on maintaining growth rather than fighting inflation. Fed policy makers on Feb. 18 raised the rate charged to banks for direct loans to 0.75 percent from 0.50 percent. Central bank officials last month forecast growth of 2.8 percent to 3.5 percent this year, and minutes of their January meeting showed they are seeking more evidence the recovery is sustainable. “We are seeing more dovish comments to counterbalance the discount rate hike, and I expect Bernanke to mention the ‘extended period’ language again,” said Greg Gibbs, a currency strategist with Royal Bank of Scotland Group Plc in Sydney. “The dollar is going to be softer than it’s been over the recent weeks.” The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners including the euro, yen and pound, dropped for the first time in four days. The index fell 0.2 percent to 80.464. Euro Rates Fed Bank of San Francisco President Janet Yellen is scheduled to speak today on the U.S. economy in San Francisco. The euro’s gain against the dollar was limited as derivative traders are signaling that the euro’s slump to a nine-month low will continue even if European Union leaders bail out Greece. Short-term rates for borrowing in euros in the forwards market are the cheapest relative to loans in dollars since September. The 50 percent collapse in that spread this month signals investors are betting the European Central Bank will keep its benchmark at a record low, sacrificing euro strength to prevent deficit-cutting by debt-laden economies in the region from stymieing growth. “Investors have already started to think about the next likely phase of the present crisis, and it appears that they all are finding are new reasons to sell the euro,” said David Woo, global head of foreign-exchange strategy at Barclays Plc in London. “Aggressive fiscal tightening by Greece, Spain and Portugal is likely to plunge their economies back into recession. All else being equal, this calls for a looser monetary policy.” To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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