The yen and dollar weakened after the Japanese and U.S. central banks pledged to keep interest rates near zero, boosting demand for stocks and higher-yielding currencies.
The Japanese and U.S. currencies fell most against the South African rand and New Zealand dollar after the Bank of Japan doubled a loan program aimed at countering deflation and the Federal Reserve retained a pledge yesterday to keep its target rate “exceptionally low” for an “extended period.” The pound rose to the highest in almost three weeks versus the dollar after a report showed U.K. jobless claims unexpectedly fell in February at the fastest pace since 1997.
“We’re in risk-on mode now,” said Omer Esiner, a senior currency analyst in Washington at Travelex Global Business Payments. “We had another pledge by a central bank to keep the spigots open. Risk assets and higher-yielding currencies are outperforming at the expense of the dollar and the yen.”
The yen fell to 124.49 per euro at 9:11 a.m. in New York from 124.31 yesterday in New York. It slid to 90.48 per dollar from 90.31. The dollar was little changed at $1.3763 per euro compared with $1.3766, after reaching $1.3818, the lowest since Feb. 9. Sterling jumped 0.7 percent to $1.5342, after trading at $1.5382, the strongest since Feb. 25.
The MSCI World Index of equities advanced 0.5 percent, and Japan’s stock benchmarks rose to eight-week highs after the Bank of Japan’s announcement.
BOJ, Fed
The yen fell against the dollar as the Bank of Japan’s credit-easing measures fell short of some analysts’ forecasts. Governor Masaaki Shirakawa and his board doubled the three-month loan facility to 20 trillion yen ($222 billion), the bank said in a statement after its meeting in Tokyo.
The dollar dropped against 12 of the 16 most-traded currencies tracked by Bloomberg a day after the Federal Open Market Committee left the federal funds rate target for overnight loans between banks in a range of zero to 0.25 percent, where it’s been since December 2008.
“The much-anticipated monetary-policy decisions from both the Fed and the BOJ have proved largely uneventful, and are unlikely to derail the recent weakening trend in both the dollar and the yen,” Lee Hardman, a foreign-exchange strategist at Bank of Tokyo Mitsubishi UFJ Ltd. in London, wrote in a note today. “Risk assets should continue to outperform.”
A U.S. report today showed wholesale prices dropped in February for the first time in five months. Prices paid to U.S. factories, farmers and other producers fell 0.6 percent in February, exceeding a 0.2 percent drop in the median forecast of 70 economists surveyed by Bloomberg News.
‘Seems Fantasy’
Harvard University Professor Martin Feldstein, who warned almost two decades ago that the euro would prove an “economic liability,” said Greece’s austerity plan will fail and the country may quit the single currency to fix its fiscal crisis.
“The idea that Greece can go from a 12 percent deficit now to a 3 percent deficit two years from now seems fantasy,” Feldstein, an adviser to U.S. presidents since Ronald Reagan, said in a March 13 interview in Geneva. “The alternatives are to default in some way or to leave, or both.”
The pound rose versus 14 of 16 major currencies tracked by Bloomberg and gained for a second day versus the dollar after minutes released today showed Bank of England policy makers unanimously kept their 200 billion-pound ($304 billion) bond- purchase program on hold for a second month on March 4 as some officials argued that inflation risks have increased.
U.K. Jobless
A separate report showed the number of people receiving unemployment benefits dropped 32,300 from January to 1.59 million, the Office for National Statistics said today in London. The median forecast in a Bloomberg News survey of 29 economists was for an increase of 6,000.
“The pound is recovering, as the labor report is not bad and the BoE was less dovish than some feared,” said David Deddouche, a foreign-exchange strategist for Societe Generale SA in Paris. “But we believe that might be only a temporary rebound. Longer term, the risks are that sovereign-risk concern continues to affect the currency, particularly so ahead of the elections.”
The pound has lost 5 percent against the dollar this year on concern this year’s election won’t result in a government with a majority of seats to push through budget-deficit cuts.
Canada’s currency reached its strongest level since July 2008 against the greenback after crude oil for April delivery climbed 2.4 percent yesterday, the most since Feb. 16. The currency has risen 3.9 percent this year. Oil is one of the nation’s biggest exports.
Canada is on course to be the first Group of Seven nation to erase its budget gap after the global financial crisis with its economy expanding at a 5 percent annualized rate in the fourth quarter. The Canadian dollar reached C$1.0103.
New Zealand’s dollar, also a commodity-linked currency, rose as much as 0.9 percent to touch 71.59 U.S. cents, the highest level since Jan. 26.
The Japanese and U.S. currencies fell most against the South African rand and New Zealand dollar after the Bank of Japan doubled a loan program aimed at countering deflation and the Federal Reserve retained a pledge yesterday to keep its target rate “exceptionally low” for an “extended period.” The pound rose to the highest in almost three weeks versus the dollar after a report showed U.K. jobless claims unexpectedly fell in February at the fastest pace since 1997.
“We’re in risk-on mode now,” said Omer Esiner, a senior currency analyst in Washington at Travelex Global Business Payments. “We had another pledge by a central bank to keep the spigots open. Risk assets and higher-yielding currencies are outperforming at the expense of the dollar and the yen.”
The yen fell to 124.49 per euro at 9:11 a.m. in New York from 124.31 yesterday in New York. It slid to 90.48 per dollar from 90.31. The dollar was little changed at $1.3763 per euro compared with $1.3766, after reaching $1.3818, the lowest since Feb. 9. Sterling jumped 0.7 percent to $1.5342, after trading at $1.5382, the strongest since Feb. 25.
The MSCI World Index of equities advanced 0.5 percent, and Japan’s stock benchmarks rose to eight-week highs after the Bank of Japan’s announcement.
BOJ, Fed
The yen fell against the dollar as the Bank of Japan’s credit-easing measures fell short of some analysts’ forecasts. Governor Masaaki Shirakawa and his board doubled the three-month loan facility to 20 trillion yen ($222 billion), the bank said in a statement after its meeting in Tokyo.
The dollar dropped against 12 of the 16 most-traded currencies tracked by Bloomberg a day after the Federal Open Market Committee left the federal funds rate target for overnight loans between banks in a range of zero to 0.25 percent, where it’s been since December 2008.
“The much-anticipated monetary-policy decisions from both the Fed and the BOJ have proved largely uneventful, and are unlikely to derail the recent weakening trend in both the dollar and the yen,” Lee Hardman, a foreign-exchange strategist at Bank of Tokyo Mitsubishi UFJ Ltd. in London, wrote in a note today. “Risk assets should continue to outperform.”
A U.S. report today showed wholesale prices dropped in February for the first time in five months. Prices paid to U.S. factories, farmers and other producers fell 0.6 percent in February, exceeding a 0.2 percent drop in the median forecast of 70 economists surveyed by Bloomberg News.
‘Seems Fantasy’
Harvard University Professor Martin Feldstein, who warned almost two decades ago that the euro would prove an “economic liability,” said Greece’s austerity plan will fail and the country may quit the single currency to fix its fiscal crisis.
“The idea that Greece can go from a 12 percent deficit now to a 3 percent deficit two years from now seems fantasy,” Feldstein, an adviser to U.S. presidents since Ronald Reagan, said in a March 13 interview in Geneva. “The alternatives are to default in some way or to leave, or both.”
The pound rose versus 14 of 16 major currencies tracked by Bloomberg and gained for a second day versus the dollar after minutes released today showed Bank of England policy makers unanimously kept their 200 billion-pound ($304 billion) bond- purchase program on hold for a second month on March 4 as some officials argued that inflation risks have increased.
U.K. Jobless
A separate report showed the number of people receiving unemployment benefits dropped 32,300 from January to 1.59 million, the Office for National Statistics said today in London. The median forecast in a Bloomberg News survey of 29 economists was for an increase of 6,000.
“The pound is recovering, as the labor report is not bad and the BoE was less dovish than some feared,” said David Deddouche, a foreign-exchange strategist for Societe Generale SA in Paris. “But we believe that might be only a temporary rebound. Longer term, the risks are that sovereign-risk concern continues to affect the currency, particularly so ahead of the elections.”
The pound has lost 5 percent against the dollar this year on concern this year’s election won’t result in a government with a majority of seats to push through budget-deficit cuts.
Canada’s currency reached its strongest level since July 2008 against the greenback after crude oil for April delivery climbed 2.4 percent yesterday, the most since Feb. 16. The currency has risen 3.9 percent this year. Oil is one of the nation’s biggest exports.
Canada is on course to be the first Group of Seven nation to erase its budget gap after the global financial crisis with its economy expanding at a 5 percent annualized rate in the fourth quarter. The Canadian dollar reached C$1.0103.
New Zealand’s dollar, also a commodity-linked currency, rose as much as 0.9 percent to touch 71.59 U.S. cents, the highest level since Jan. 26.
