The yen weakened against the dollar after Japanese Finance Minister Jun Azumi confirmed agreement among the Group of Seven nations to cooperate on extreme currency moves.
The euro fell versus most of its major counterparts as Spanish Budget Minister Cristobal Montoro said the nation faces difficulties in accessing capital markets. The pound fell versus the dollar after Egan-Jones Ratings Co. cut the U.K.’s credit ranking. Japan’s currency weakened after Azumi said a conference call with G-7 finance officials didn’t oppose Japan’s September statement calling for cooperation to address disorderly foreign- exchange swings.
“Comments from Azumi elevate the risk that we will see official action from Japan,” said Eric Viloria, senior currency strategist for Gain Capital Group LLC in New York. “We’ve already been hearing rumors about stealth intervention and that’s keeping the yen from strengthening.”
The yen dropped 0.5 percent to 78.69 per dollar at 9:50 a.m. in New York after strengthening to 78.11. Japan’s currency was little changed at 97.93 per euro. The 17-nation currency fell 0.4 percent to $1.2454.
Canada’s dollar advanced against its U.S. peer after central bank policy makers said they may raise interest rates with the domestic economic recovery proceeding as forecast, even as global risks have increased.
Canada’s currency rose 0.2 percent to C$1.0378 cents per U.S. dollar after falling as much as 0.3 percent.
Australia’s dollar rallied 0.1 percent to 97.40 U.S. cents even after the Reserve Bank of Australia lowered borrowing costs by 0.25 percent to 3.5 percent. Swaps data compiled by Bloomberg had shown a more than 40 percent change of a 0.5 percent reduction.
Spain called for outside support for the first time to battle the financial crisis.
“What the risk premium tells us is that as a state and as Spain overall we have a problem when it comes to going to the markets,” Spain’s Montoro said. “What that risk premium shows is that the door of the markets isn’t open to Spain.”
Euro-region retail sales declined 1.0 percent in April, after gaining 0.3 percent the previous month, the European Union’s statistics office said in Luxembourg.
“With economic data showing little signs of stabilization, lingering political uncertainty in Greece, and concerns about Spanish banking, headwinds for the euro will persist over the medium-term,” Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York, wrote today in a note to clients. The shared currency may drop to $1.2385 before finding support, he said.
The euro has declined 3.7 percent over the past six months, the worst performer among 10 developed-nation currencies, according to Bloomberg Correlation-Weighted Indexes. The dollar gained 4.5 percent, and the yen appreciated 3.3 percent.
Finance ministers and central bank governors from the G-7 held a call today to discuss the debt crisis.
G-7 members are “concerned about the unstable situation in the current global economy and we need to share these concerns,” Japan’s Azumi told reporters in Tokyo. Canadian Finance Minister Jim Flaherty said yesterday in Ottawa that officials would discuss “the situation in Europe,” without elaborating.
The pound approached the lowest in more than four months versus the dollar after Egan-Jones lowered the U.K.’s rating by one level to AA-, citing concern the nation will be unable to keep reducing its budget deficit as the economy weakens.
Bank of England policy makers will keep their main interest rate at a record low 0.5 percent on June 7, according to all 55 economists in a Bloomberg survey. The central bank will hold its asset-purchase plan at 325 billion pounds ($499 billion), according to the median forecast of a separate Bloomberg survey.
Sterling dropped 0.1 percent to $1.5370 after falling to $1.5269 on June 1, the lowest level since Jan. 13.