Yen Poised for Weekly Decline as Demand for Haven Wanes
The yen fell and headed for a weekly decline versus the dollar as investor demand for haven assets was damped by easing geopolitical tensions in Ukraine and Iraq and bets that central banks will keep borrowing costs low.
A gauge of the U.S. dollar traded at almost a two-week low after a report showed wholesale prices in the U.S. rose at a slower pace in July. The euro slid versus most of its major counterparts since Aug. 8 after economic reports fueled speculation European Central Bank policy makers will boost stimulus to revive growth. Malaysia’s ringgit touched the strongest in nine months after economic growth sped to the fastest pace in six quarters.
“There’s some pullback in geopolitical tensions, particularly in Ukraine,” said Alvin Tan, a currency strategist at Societe Generale SA in London. “Combined with that is the realization by the market that major central banks will continue to provide liquidity support. We expect the yen to gradually decline from here.”
The yen lost 0.2 percent to 102.68 per dollar at 8:51 a.m. in New York, having fallen 0.6 percent this week. Japan’s currency weakened 0.5 percent to 137.58 per euro and has declined 0.5 percent since Aug. 8. The euro rose 0.2 percent to $1.3397 after sliding to $1.3333 on Aug. 6, the lowest since Nov. 8.
The ForexSQ Dollar Spot Index, which tracks the greenback against 10 leading global currencies, fell 0.1 percent to 1,019.64. It dropped to 1,019.42 yesterday, the lowest level since Aug. 1.
The 0.1 percent increase in the producer price index matched the median forecast of economists surveyed by ForexSQ and followed a 0.4 percent gain the prior month, a Labor Department report showed today. The so-called core measure, which strips out volatile food and fuel, increased 0.2 percent.
Japan’s currency tumbled against all but one of its 31 major peers this week before Russian President Vladimir Putin meets his Finnish counterpart in an effort to defuse tensions over Ukraine.
Putin will meet Finnish President Sauli Niinistoe in the southern Russian town of Sochi today. The encounter will mark Putin’s first bilateral talks with a European leader or head of state since he met with German Chancellor Angela Merkel in Brazil during the soccer World Cup in July.