Dollar, Yen Gain as Global Slowdown Spurs Haven Bid

he dollar and yen strengthened versus most of their major counterparts as signs of an economic slowdown in Asia and Europe boosted demand for haven assets.

The yen gained against the higher-yielding Australian and New Zealand dollars after a Chinese gauge indicated that factory output contracted for a second month for the first time since 2009. Japan’s Tankan report showed pessimism among the nation’s large manufacturers deepened. The U.S. currency touched the strongest level in three weeks versus the euro before data today that may indicate the jobless rate in the 17-nation region climbed to a record in August.

 “The global economic outlook has become increasingly uncertain, deteriorating market sentiment,” said Kengo Suzuki, a currency strategist in Tokyo at Mizuho Securities Co., a unit of Japan’s third-largest bank by market value. “Investors are buying safe-haven currencies such as the yen and dollar.”
The dollar gained 0.3 percent to $1.2821 per euro at 1 p.m. in Tokyo from last week. It earlier touched $1.2804, the strongest since Sept. 11. The greenback bought 77.88 yen from 77.96. Japan’s currency traded at 99.85 per euro, 0.4 percent higher than its close in New York. It added 0.5 percent to 80.51 per Australian dollar and gained 0.4 percent to 64.43 against the New Zealand currency.

Chinese Manufacturing

A gauge of China’s factory output was 49.8 last month from 49.2 in August, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today in Beijing. Separate data from HSBC Holdings Plc and Markit Economics on Sept. 29 showed manufacturing shrank for an 11th month.
Japan’s Tankan index was minus 3 in the three months ended Sept. 30, compared with minus 1 in the previous quarter, the nation’s central bank said today. A negative figure means pessimists outnumber optimists.

In the euro area, the jobless rate probably climbed to 11.4 percent in August, according to the median estimate of economists in a Bloomberg News survey before the European Union’s statistics office releases the report. The figure would be the highest in data compiled by Bloomberg going back to 1990.
The yen jumped 7.6 percent in the past six months, the most among the 10 developed-nation currencies tracked by Bloomberg Correlation Weighted Indexes. The dollar added 0.4 percent and the euro lost 4 percent, the biggest drop after the Swiss franc.
Japan’s currency tends to strengthen during periods of financial and economic turmoil because the nation’s current- account surplus means it isn’t reliant on foreign capital. The dollar benefits because it is the world’s reserve currency.

Dollar Shorts

The difference in the number of wagers by hedge funds and other large speculators on a decline in the U.S. Dollar Index compared with those on a gain -- so-called net shorts -- was 3,970 on Sept. 25 compared with a net long position of 4,896 a week earlier, according to figures from the Washington-based Commodity Futures Trading Commission.
“The market was getting short U.S. dollar last week,” Greg Gibbs, a senior currency strategist at Royal Bank of Scotland Group Plc in Singapore, wrote today in an e-mailed note to clients. “They will be looking to square that up further to start this week with fears rising over Europe rising and the state of the global economy.”
The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six U.S. trading partners, rose 0.2 percent to 80.066. The gauge climbed earlier to 80.147, the highest since Sept. 11.

Year Low

Australia’s dollar touched the lowest in more than a year against its New Zealand counterpart before the larger nation’s Reserve Bank holds a policy meeting tomorrow.
Interest-rate swaps data compiled by Bloomberg show traders see an 86 percent RBA chance policy makers will lower the overnight cash-rate target by 25 basis points from 3.5 percent. That contrasts with the median forecast of economists in a Bloomberg survey that predicts officials will keep the benchmark unchanged for a fourth-straight meeting.

The so-called Aussie dollar touched NZ$1.2469, the lowest since September 2011, before trading at NZ$1.2494, 0.1 percent below its close last week.

To contact the reporters on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net