Yen Drops Versus Most Major Peers as U.S Retail Sales Increase

The yen weakened against most of its major counterparts.

Oct. 15 (Bloomberg) -- The yen weakened against most of its major counterparts as a report showed U.S. retail sales rose more than forecast in September, reducing demand for safety.

Japan’s currency fell for a third day versus the dollar and euro. The Mexican and Swedish currencies climbed versus their major peers, while the euro touched a one-week high against the yen after German Finance Minister Wolfgang Schaeuble said a Greek sovereign default “will not happen.” South Africa’s rand slid for a second day versus the dollar after Standard & Poor’s cut the country’s credit rating Oct. 12.

“Good retail sales should be decent for risk-taking at this point,” Brian Kim, a currency strategist at RBS Securities Inc. in Stamford, Connecticut, said in a telephone interview. “The dollar is getting a little boost. The data is helpful to the U.S. dollar versus yen.”

The yen depreciated 0.4 percent to 78.74 per dollar at 11:48 a.m. New York time, adding to a 0.3 percent decline over the previous two trading days. It touched 78.86, the weakest level since Oct. 5. Japan’s currency fell 0.4 percent to 102.01 per euro and reached 102.29, the weakest level since Oct. 8. The euro was little changed at $1.2957.

The yen has fallen 4.8 percent this year, the worst performance among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar dropped 2.2 percent, and the euro lost 2.4 percent.

Biggest Winners

Mexico’s peso and Sweden’s krona were the biggest winners among the dollar’s major counterparts.

The peso advanced 0.5 percent to 12.8053 to the American currency and gained 0.4 percent to 16.5945 per euro. The U.S. is Mexico’s biggest trade partner.

The krona strengthened 0.5 percent to 6.6636 per dollar and advanced 0.5 percent to 8.6312 per euro.

Brazil’s real gained versus the dollar for the first time in four days. The currency appreciated 0.3 percent to 2.0374 to the greenback.

U.S. retail sales increased 1.1 percent in September, Commerce Department figures showed today in Washington, reflecting broad-based gains that indicate household spending helped bolster economic growth last quarter. The advance followed a revised 1.2 percent gain in August that was the biggest since October 2010 and larger than previously reported. A Bloomberg survey projected a 0.8 percent rise.

The S&P 500 Index gained 0.4 percent after slipping 0.1 percent earlier, and the Stoxx Europe 600 Index of shares rose 0.5 percent.

Manufacturing Gauge

Gains in risk appetite were tempered as a gauge of manufacturing in the New York region contracted for a third straight month in October. The Federal Reserve Bank of New York’s general economic index rose to minus 6.2 from minus 10.4 in September, which was the lowest since April 2009. The median forecast in a Bloomberg survey called for minus 4. Readings of less than zero signal contraction in New York, northern New Jersey and southern Connecticut.

Commodities fell, with the S&P GSCI Index of raw materials sliding 0.9 percent.

German Finance Minister Schaeuble said there won’t be “a ‘Staatsbankrott’ in Greece,” using the German word for state insolvency.

“Greece has had to take a lot of very serious reforms” and an increasing majority of the population “does understand that being a member of the common European currency is in the best interest of Greece,” Schaeuble said.

Growth Concern

The euro fell earlier by the most in almost a week amid concern that economic growth in the 17-nation currency block may falter. It weakened as much as 0.5 percent, the biggest intraday drop since Oct. 9.

“The euro recovered this morning by filling the gap and retracing the losses earlier,” Dan Dorrow, head of research in Stamford, Connecticut, at Faros Trading LLC, said in a telephone interview. “The idea that they’re not going to let the Greek situation fail and disrupt the market has been a consensus among policy makers for a while.”

European Union leaders will meet in Brussels on Oct. 18-19.

The pound declined earlier against the euro as the Ernst & Young ITEM Club said the U.K. economy will shrink in 2012, reinforcing the case for more asset purchases.

The U.K. economy will fall 0.2 percent this year, the London-based ITEM Club said in a report today. It previously forecast stagnation. Britain’s annual inflation rate dropped to 2.2 percent in September, from 2.5 percent in August, according to the median estimate of economists in a Bloomberg News survey before the data is released tomorrow.

The pound weakened as much as 0.2 percent to 80.78 pence per euro before trading little changed at 80.62 pence. It was little changed at $1.6062.

Spanish Decision

Gains by the euro may be limited as investors wait to see if Spain will seek a financial bailout.

Spanish Economy Minister Luis de Guindos said over the weekend in Tokyo that he was “extremely comfortable” with his country’s ability to fund itself through 2012. The Spanish 10- year bond yield rose 19 basis points, or 0.19 percentage point, to 5.82 percent, after falling to 5.61 percent on Oct. 12, the least since Sept. 14.

Figures from the Commodity Futures Trading Commission showed the difference in the number of wagers by hedge funds and other large speculators on a decline in the euro versus the dollar compared with those on a gain -- so-called net shorts  -- was 72,570 on Oct. 9. That was the most since the period ended Sept. 21. Bets on the yen’s gains against the greenback, or net long positions, declined to 12,914 in the same period, the least since the week through Aug. 21, the data show.

The rand fell after S&P cut South Africa’s credit rating last week by one level to BBB with a negative outlook. The company cited concern that a wave of strikes in the mining industry is placing pressure on government spending.

The currency dropped 0.9 percent to 8.8067 per dollar.

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