By Ron Harui and Stanley White
Nov. 12 (Bloomberg) -- The yen declined against the euro as Asian stocks recovered most of their earlier losses, giving investors confidence to increase holdings of higher-yielding assets financed in Japan.
The currency also fell versus the Australian and New Zealand dollars, two favorites of so-called carry trades, as U.S. stock futures gained. The euro climbed as a technical chart that traders use to predict price movements signaled its 3 percent loss versus the dollar in the past five days was overdone.
``Japanese equities are paring losses and U.S. stock futures are gaining, indicating some improvement in risk-taking appetite,'' said Lee Wai Tuck, a currency strategist at Forecast Pte Ltd. in Singapore. ``The yen is being sold a bit.''
The yen dropped to 122.94 per euro at 12:10 p.m. in Tokyo from 122.27 late in New York yesterday. It fell to 97.79 against the dollar from 97.65. The euro gained to $1.2571 from $1.2522. It had reached $1.2477, the lowest since Oct. 28. The British pound advanced to $1.5440 from $1.5384.
Against the yen, the Australian dollar climbed 0.9 percent to 64.77 from 64.17 late in New York yesterday, and the New Zealand dollar strengthened 1 percent to 56.46 from 55.91. The Swedish krona gained 0.8 percent to 12.194 yen and the Danish krone rose 0.6 percent to 16.5232 yen.
In carry trades, investors get funds in a country with low borrowing costs and buy assets where returns are higher. Japan's 0.3 percent target lending rate compares with 5.25 percent in Australia and 6.5 percent in New Zealand.
The yen weakened against 14 of the 16 most-active currencies after Japan's Nikkei 225 Stock Average trimmed its loss to 0.3 percent after falling as much as 2.7 percent. The Standard & Poor's 500 Index futures climbed 1.3 percent.
`Slide Looked Overshot'
The euro rose from a two-week low against the dollar as its 14-day stochastic oscillator was 20.03 yesterday. A level below 20 suggests a security has fallen too fast.
``The currency has been sold quite a lot, so its slide looked overshot,'' said Ryohei Muramatsu, manager of Group Treasury Asia at Commerzbank AG in Tokyo. ``Some buying back probably occurred.''
Losses in the U.S. dollar may be limited after prices fell for the commodities which Australia and New Zealand export and as Standard & Poor's cut South Africa's ratings outlook.
The ICE's Dollar Index, which tracks the greenback against six trading partners, may gain for a fifth day. The Bloomberg UBS Constant Maturity Commodity Index of 26 raw materials dropped 3.6 percent yesterday. Standard & Poor's cut its outlook on South Africa's BBB+ credit rating to ``negative'' from ``stable.''
``There's negative news from Oceania and South Africa, so I see the dollar rebounding against these currencies,'' said Takeshi Iba, vice president of foreign exchange in Tokyo at BBH Investment Services Inc., a unit of Brown Brothers Harriman.
The Dollar Index traded at 86.961 from 87.075 yesterday, when it reached 87.279, the highest since Oct. 28.
To contact the reporters on this story: Ron Harui in Singapore at rharui@bloomberg.net; Stanley White in Tokyo at swhite28@bloomberg.net
Posts
1 comments:
Looking a few months ahead I think the dollar will start to weaken again as the inflationary impact of the trillions of dollars pumped into the market as part of the bailout package starts to take effect.
At this stage the precious metals will be very attractive to investors looking to preserve the value of their capital.
Interestingly, Jim Rogers is reported to be short of US Treasuries and is keen on investing in precious metals.
Furthermore, in toss up between gold and silver, he seems to go for the latter. This is mainly for supply reasons, with silver being around only a tenth of the gold market.
Also we see that in recent two month correction, silver has fallen by around 33% while gold has dropped about 12% in comparison.
Also bear in mind that with the Chinese ecoomic stimulus package, they are going to need to fund it from somewhere. What about all those billions they have invested in US treasury bonds.
Post a Comment