The yen fell for an eighth day against the dollar, the longest streak in seven years, as a report showing Japan’s exports fell the most since the 2011 earthquake fueled bets the central bank will add more stimulus.
The Japanese currency dropped versus all of its 16 most- traded counterparts after Economy Minister Seiji Maehara pressed the Bank of Japan yesterday for more action to boost the economy. The euro rose after Spanish Prime Minister Mariano Rajoy extended an electoral majority in his home region of Galicia, vindicating the government’s austerity program. South Africa’s rand appreciated against all of its major peers.
“People are pricing in the possibility that the BOJ is going to ease,” Andrew Busch, a global currency strategist at Bank of Montreal in Chicago, said in a telephone interview. “We know that Japan is hurting economically, and today we got the first glimpse of how bad it is with this export data.”
The yen fell 0.7 percent to 79.84 per dollar at 9:16 a.m. New York time after dropping to 79.88, the weakest level since July 12. Japan’s currency declined 0.9 percent to 104.17 per euro. The euro strengthened 0.2 percent to $1.3048 after dropping 0.7 percent over the previous two trading days.
Australia’s dollar weakened versus most of its major counterparts before a report this week that may show inflation held near the slowest in 13 years, providing scope for the country’s central bank to cut interest rates.
The Aussie depreciated 0.1 percent to $1.0321 and reached $1.0302, its lowest level since Oct. 17. It rose 0.6 percent to 82.39 yen.
The South African rand was the biggest winner versus the greenback among major currencies as foreign investors resumed purchases of the country’s bonds. Prospects of an interest-rate cut fell after retail sales grew more than expected in August.
The rand gained as much as 0.7 percent before trading 0.4 percent stronger at 8.6311 per dollar. It appreciated 0.2 percent to 11.2622 per euro.
Implied volatility among major currencies, which signals the expected pace of price swings, touched 7.54 percent, a JPMorgan Chase & Co. index for Group-of-Seven currencies showed. The gauge fell to 7.47 percent a week ago, the lowest since October 2007. Lower volatility makes investments in currencies with higher benchmark lending rates more attractive because the risk in such trades is that market moves will erase profit. The index’s average over the past five years is 12.4 percent.
Japanese exports slid 10.3 percent in September from a year earlier, leaving a trade deficit of 558.6 billion yen ($7 billion), the Finance Ministry said in Tokyo. The median forecast in a Bloomberg News survey was for a 9.9 percent decline. The decrease was the most since May 2011, two months after a magnitude-9 quake struck northeastern Japan, triggering a tsunami and a nuclear disaster.
The BOJ announces its next policy decision on Oct. 30 and will also issue its revised economic projections for the 2012 and 2013 fiscal years and its first set of forecasts for 2014. After the Federal Reserve announced open-ended bond purchases last month, its Japanese counterpart responded by expanding its asset-buying program by 10 trillion yen on Sept. 19.
“The market is acting with an assumption that there will be additional stimulus by the Bank of Japan,” hurting the yen, said Junichi Ishikawa, an analyst at IG Markets Securities Ltd. in Tokyo. “The economies in Europe and Japan look bleaker compared with the U.S., which is also a buying catalyst for the dollar.”
Traders cut bets the yen will gain versus the dollar, figures from the Washington-based Commodity Futures Trading Commission showed. The difference in the number of wagers by hedge funds and other large speculators on a rise in the Japanese currency compared with those on a drop -- so-called net longs -- was 10,086 on Oct. 16, compared with net longs of 12,914 a week earlier.
“There are fiscal-easing moves worldwide, but on a monetary basis, Japan is falling short,” Maehara said yesterday on a Fuji Television program.
The euro rose for the first time in three days against the dollar after Rajoy’s People’s Party won 41 of the 75 seats in the regional assembly in Galicia, allowing it to extend its majority in the northwestern region.
“The steps that we have explained have to be taken to resolve the crisis have had overwhelming support,” Carlos Floriano, the party campaign chief, said in an interview on public broadcaster Radio Nacional de Espana.
Leaders at a European Union summit in Brussels last week committed to agreeing by year-end on a legislative framework for a single bank supervisory mechanism, a deal that Moody’s Investors Service said is negative for the credit ratings of weaker nations.
The euro has weakened 0.5 percent since climbing to $1.3172 on Sept. 17, which was the strongest since May.
“This range trading we’ve seen for a while will dominate,” said Ulrich Leuchtmann, head of currency strategy at Commerzbank AG in Frankfurt.