Home Forex Market News Yen Weakens on Reduced Haven Bid; Euro Near 2014 Nadir

Yen Weakens on Reduced Haven Bid; Euro Near 2014 Nadir

The yen fell a fourth day as demand for havens deteriorated. The euro was near the lowest this year after Germany’s economy contracted more than economists forecast last quarter and France stagnated.

The 18-nation currency headed for a four-day slide amid speculation the European Central Bank will add stimulus. South Korea’s won gained after the Bank of Korea cut its benchmark interest rate in line with analysts’ expectations. New Zealand’s dollar held a gain from yesterday following a report that showed second-quarter retail sales exceeded economists estimates.

“The easing of geopolitical tensions has softened the impact on risk flows into the yen,” said Desmond Chua, a strategist at CMC Markets in Singapore. “We’re looking at this reverse of trade flows, where previously we had traders buying into safe havens and have now offloaded.”

The yen slid 0.1 percent to 102.56 per dollar as of 7:32 a.m. in London from yesterday, after earlier touching 102.66, the weakest since Aug. 5. It has declined 0.5 percent since Aug. 8. Japan’s currency depreciated 0.1 percent to 136.97 per euro. The euro fell 0.1 percent to $1.3354, after losing 0.3 percent in the previous three sessions.

The MSCI Asia Pacific Index of shares gained 0.4 percent, while Japan’s Topix advanced 0.7 percent.

Aid Compromise

Ukraine opened the door to a compromise over humanitarian aid arriving on hundreds of trucks from Russia, saying it could accept the supplies if the Red Cross distributed them in the nation’s war-torn eastern regions. The dispute over the Russian convoy has stoked tensions, prompting the U.S. and the European Union to warn the government in Moscow against using aid as a pretext for a military intervention.

Gross domestic product in Germany, Europe’s largest economy, contracted 0.2 percent in the second quarter, compared with a 0.1 percent decline projected by economists in a Bloomberg News survey. Data earlier showed the French economy, the region’s second-largest, posted zero growth in the period, compared with a median estimate for a 0.1 percent gain.

The European Union’s statistics office will probably say today that growth in the euro-area economy weakened to 0.1 percent in the second quarter from 0.2 percent in the previous period, according to the median estimate of economists in a another Bloomberg survey.

ECB Stimulus

The ECB in June cut the deposit rate to minus 0.1 percent and lowered the main refinancing rate to a record 0.15 percent. Policy makers next meet on Sept. 4.

“It would seem that the authorities are quite happy with a weaker euro,” said Callum Henderson, Singapore-based global head of foreign-exchange research at Standard Chartered Plc. “That’s probably what they’ll get anyway because of the weak fundamentals.”

The euro lost 0.5 percent in the past month, according to Bloomberg Correlation-Weighted Indexes that track 10 developed-nation currencies. The yen climbed 0.6 percent in the same period, while the dollar gained 1.7 percent.

The greenback gained for a fourth day against the yen after it broke above resistance levels where sell orders may be clustered.

“Dollar-yen is looking solid,” said Takuya Kawabata, an analyst at Gaitame.com in Tokyo. “The pair has broken out of the triangle pattern, so if we see a bottom form around the 102 level, it could extend a little higher. The break above the key resistance at 103 yen, near the highs in May, late July and early August, would be a buy signal.”

The Bloomberg Dollar Spot Index (MXAP), which tracks the greenback against 10 developed-market peers, was little changed at 1,022.43. The gauge touched 1,024.67 on Aug. 6, matching the highest since Feb. 11.

Won Gains

The won jumped 0.8 percent to 1,020.93 per dollar.

The Bank of Korea lowered benchmark rate by 25 basis points to 2.25 percent, in line with the estimate of 14 of 18 economists surveyed by Bloomberg. The rest expected no change. A basis point is 0.01 percentage point. BOK Governor Lee Ju Yeol said the rate cut was intended to revive sentiment and promote economic recovery and was possible because inflationary pressure isn’t high.

“Expectations for a rate cut have been reflected in the exchange rate since July, and it seems investors are taking the actual cut as a chance to take profit and sell dollars,” said Jeon Seung Ji, a Seoul-based currency analyst for Samsung Futures Inc.

New Zealand’s kiwi gained against 15 of its 16 major peers after the statistics bureau said today retail sales rose 1.2 percent in the second quarter from the previous three-month period. The median estimate of economists surveyed was for a 1 percent increase.

New Zealand’s dollar rose 0.1 percent to 84.68 U.S. cents from yesterday, when it strengthened 0.3 percent.

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