By David Goodman and Candice Zachariahs - Sept 10, 2013
The yen fell against the euro and dollar for a second day as speculation a Russian bid to get Syria to surrender its chemical weapons will avert a U.S. attack damped demand for haven assets and boosted equities.
Japan’s currency slid versus all but one of its 16 major peers as minutes of the Bank of Japan’s August meeting released today showed policy makers agreed monetary easing was taking effect. Australia’s dollar advanced to the strongest in six weeks as Chinese data added to signs of a recovery in the South Pacific nation’s largest trading partner. Norway’s krone jumped after inflation accelerated.
“The yen is weakening because there is plenty of risk appetite,” said Peter Frank, global head of currency strategy at Banco Bilbao Vizcaya Argentaria SA (BBVA) in London. “There is more pressure for dollar-yen in this environment. Everything is going right for the government” in Japan, he said.
The yen dropped 0.5 percent to 132.58 per euro at 6:06 a.m. New York time after sliding 1 percent yesterday. Japan’s currency fell 0.5 percent to 100.11 per dollar. The euro was little changed at $1.3244.
The Stoxx Europe 600 Index gained 1.1 percent and the MSCI Asia Pacific Index rose 1.2 percent, advancing for a ninth day in its longest winning streak since December. Currency volatility measured by the JPMorgan G-7 Volatility Index declined to as low as 9.10, the least since Aug. 12.
Russia seized on a casual comment by U.S. Secretary of State John Kerry to urge that Syria turn over its arsenal of chemical weapons to international control.
“If the establishment of international control of chemical weapons in the country will help avoid military strikes, we will immediately start working with Damascus,” Russian Foreign Minister Sergei Lavrov said after meeting with his Syrian counterpart in Moscow yesterday. Syria’s government said it welcomed the idea.
The U.S. is “going to take a hard look” at the Russian proposal, though Assad’s track record “doesn’t give us a lot of confidence,” said Tony Blinken, President Barack Obama’s deputy national security adviser. Obama will make a televised address today to make the case that U.S. security is at stake if the Syrian regime’s alleged use of chemical weapons against civilians goes unanswered.
“We’ve had this rather out-of-the-blue potential way to avoid the U.S. getting involved in Syria, so that certainly helps risk currencies,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. (WBC) in Sydney.
The yen has declined 1.9 percent in the past week, the worst performer among 10 developed-nation currencies tracked by Bloomberg Correlation Weighted Indexes. The dollar dropped 1.2 percent and the euro fell 0.6 percent.
The yen also weakened as minutes of the BOJ’s Aug. 7-8 meeting showed policy board members said the central bank’s bond purchases were putting downward pressure on yields and consumer-price expectations have turned favorable.
The Aussie strengthened for a third day against the U.S. currency after National Australia Bank Ltd. said its index of business confidence improved in August.
Factory production in China increased 10.4 percent last month from a year earlier, compared with a 9.7 percent gain in July, the National Bureau of Statistics said in Beijing. Retail sales advanced 13.4 percent after July’s 13.2 percent increase.
“The Aussie dollar is reacting positively to data out of China,” said Takuya Kawabata, an analyst at Gaitame.com Research Institute Ltd. in Tokyo. “Expectations that China’s economic recovery is underway are building. The Aussie is likely to target the July high” of 93.19 U.S. cents in the short term.
Australia’s dollar rose 0.5 percent to 92.76 U.S. cents after appreciating to 92.90, the highest since July 26.
The Philippine peso climbed the most in three months as a report showed exports unexpectedly rose in July. The peso strengthened 1 percent to 43.80 per dollar, the steepest advance since June 10, Tullett Prebon Plc data show. Taiwan’s dollar rose to the strongest level since June after exports increased for a fourth month.
Norway’s krone climbed 1 percent to 7.8867 per euro after a report showed inflation accelerated to 3.2 percent in August, quicker than the 3 percent median estimate in a Bloomberg survey of economists.
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