Yen Falls as Stock Gains Spur Investors to Seek Higher Yields
The yen fell against 15 of the 16
most-active currencies as a rally in Asian stocks prompted
investors to purchase higher-yielding assets funded in Japan.
Japans currency dropped the most versus South Africas
rand after an index of U.S. manufacturing unexpectedly gained
last month, easing concern that global growth will slow. The yen
slumped to three-week lows against the Australian and New
Zealand dollars.
“With stock markets calming down, the yen appears to be
losing ground gradually against major currencies, said Takashi
Maeda, a senior vice president of currency sales in Tokyo at
Mizuho Corporate Bank Ltd., a unit of Japans second-largest
publicly traded lender by assets. “Gains in stocks give
investors tolerance of risk.
The yen declined to 158.27 per euro as of 10:32 a.m. in
Tokyo from 157.67 late in New York on Feb. 1. It was at 106.95
versus the dollar from 106.49. It may fall to 107.20 per dollar
and 158.50 a euro today, Maeda said.
Japans currency dropped 0.5 percent to 14.5461 against the
South African rand as the Nikkei 225 Stock Average gained 2.6
percent, the most since Jan. 29. It fell 0.4 percent to 96.64
per Australian dollar.
The euro may head for three days of losses versus the
dollar as a technical chart traders use to predict price
movements show the currencys advance to a record high may stall.
It was at $1.4800 from $1.4802 on Feb. 1, when it reached
$1.4949, the strongest since the all-time high of $1.4967 on Nov.
23. The currency traded at 0.7530 versus the British pound from
0.7531.
Yen Longs
The U.S. Institute for Supply Management said Feb. 1 its
manufacturing index rose to 50.7 in January from 48.4 the
previous month, exceeding the dividing line between contraction
and expansion. Economists had forecast the index would fall to
47.3, according to a Bloomberg survey.
Japans currency also fell after figures from the
Washington-based Commodity Futures Trading Commission last week
showed traders had increased bets that the yen will rise against
the dollar to the most in three years. The data are sometimes
used as a contrary indicator because the reversal of such
positions can cause large currency swings.
The yen fell for a third day the dollar as traders held
bets the Bank of Japan may lower interest rates this year. BOJ
policy board member Kiyohiko Nishimura said last week the
central bank will take “flexible action in response to any
“shocks to the economy.
“Yen longs have climbed up to very high levels already,
said Tomoko Fujii, head of economics and strategy for Japan at
Bank of America Corp. “With expectations of the Bank of Japans
rate hike dwindling, there is no catalyst for further yen buying.
This will limit yens advance.
Technical Charts
Japans currency may move between 105 and 108 per dollar
this week, Fujii said. The likelihood the BOJ will cut its
benchmark interest rate from 0.5 percent at its next meeting on
Feb. 14-15 was 3 percent today, according to a Credit Suisse
Index based on the trading of interest-rate swaps. The odds were
zero percent immediately before the BOJs meeting ended Jan. 22.
The difference in the number of wagers by hedge funds and
other large speculators on an advance in the yen compared with
those on a drop — so-called net longs — was 52,928 on Jan. 29,
the most since February 2004, the Commodity Futures Trading
Commission data showed.
The euro may decline to a $1.47 against the dollar this
week as its chart is set to form a so-called triple top, said
Kenichiro Fujita, manager of derivatives-marketing in Tokyo at
Aozora Bank Ltd., Japans ninth-largest publicly traded lender
by assets.
A triple top forms when an exchange rate rises, falls and
then climbs back to the earlier price. The euro advanced to a
record of $1.4967 on Nov. 23, with subsequent peaks at $1.4922
on Jan. 15 and $1.4949 on Feb. 1. The pattern indicates a
currency may decline after it has had three consecutive peaks.
“The euro looks technically weak, said Fujita. “There
are feelings of fatigue after the euro failed to break though a
record high last week.
