Yen Touches One-Month Low Versus Euro Before BOJ’s Kuroda Speaks The yen slid to a one-month low against the euro before Bank of Japan Governor Haruhiko Kuroda speaks tomorrow at the Federal Reserve’s annual monetary conference in Jackson Hole, Wyoming. The 17-nation euro extended gains against Japan’s currency after European Central Bank Governing Council Member Ewald Nowotny said good economic news from the euro area removed the need for a further rate cut. The U.S. currency was poised for a weekly gain against most major peers as economic data supported the case for the Fed to reduce stimulus as early as next month. The pound was set to complete a weekly decline before Bank of England Governor Mark Carney speaks next week. “BOJ officials have really got to maintain what they’ve done,” said Derek Mumford, a director at Rochford Capital, a currency risk-management company in Sydney. “They’ve also got to look to pressure the government as much as they possibly can to fulfill their side of the bargain with structural reform. There’s potential for the yen to weaken in the very near term.” The yen lost 0.4 percent to 132.33 per euro as of 10:44 a.m. in Tokyo after touching 132.34, the lowest since July 25. It has dropped 1.7 percent this week. Japan’s currency fell 0.4 percent to 99.07 per dollar, weakening to 99 for the first time since Aug. 5 and extending its weekly decline to 1.6 percent. The U.S. currency was little changed at $1.3353 per euro. The Bloomberg U.S. Dollar Index has climbed 0.6 percent to 1,028.59 this week. The pound was little changed at $1.5584, having fallen 0.3 percent since Aug. 16. Strong Enough “I would not see many arguments now for a rate cut,” Nowotny, who heads Austria’s central bank, said in an interview with Bloomberg Television in Jackson Hole, Wyoming, late yesterday. At the same time, he ruled out an early monetary tightening, saying “the most recent developments will have no immediate effects on the policy of the European Central Bank.” With the euro area emerging from its longest-ever recession last quarter, ECB officials led by President Mario Draghi are seeking to quell any speculation in financial markets that they will shift to tighter policy prematurely. Draghi has pledged to keep the ECB’s benchmark rate at a record low of 0.5 percent for an “extended period.” Strong Enough The BOJ’s Kuroda said Japan’s economy is strong enough to withstand a planned sales-tax increase, according to an interview with the Mainichi newspaper published this week. The central bank doubled its monthly bond purchases to more than 7 trillion yen ($71 billion) in April to stoke 2 percent inflation in two years. Kuroda will take part in a panel discussion tomorrow, along with Alexandre Tombini, Brazil’s central bank head, at the three-day Jackson Hole conference. Ben S. Bernanke, who has given the introductory speech every year since becoming Fed chairman in 2006, doesn’t plan to attend the conference. The FOMC will reduce its monthly purchases of $85 billion in bonds at its next meeting on Sept. 17-18, according to 65 percent economists in an Aug. 9-13 Bloomberg survey. The median estimate is a cut to $75 billion each month. Minutes from the Federal Open Market Committee’s July 30-31 gathering, released this week, showed “almost all committee members agreed that a change in the purchase program was not yet appropriate,” and a few said “it might soon be time to slow somewhat the pace of purchases as outlined in that plan.” “I would have liked to start cutting back earlier,” Dallas Fed President Richard Fisher told reporters yesterday after a speech in Orlando, Florida. “The economy is strong enough” for slowing purchases. The U.S. is “moving in the right direction” with the performance of the job market, a trend that “has to be evaluated against the costs of continuing” bond purchases, Fisher, who doesn’t vote on monetary policy this year, said. “The market had expected tapering to kick in in September, but it has become even more certain after the release of the minutes,” said Yoshitsugu Fujita, an assistant vice president of global markets in New York at Sumitomo Mitsui Trust Bank Ltd.
Posted on: Sat, 24 Aug 2013 01:49:55 +0000
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