The difference in the number of positions by hedge funds and other large speculators on an advance in the euro compared with those on a drop was 5,126 on Jan. 1, compared with a net 2,549 positions it would decline a week earlier. The figures reflect holdings in currency-futures contracts at the Chicago Mercantile Exchange as of Jan. 1.
The euro has strengthened 0.8 percent in the past month, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The dollar dropped 0.4 percent, while the yen tumbled 7.1 percent.
The yen rallied after falling against the dollar for eight consecutive weeks amid speculation Japan’s newly elected Prime Minister Shinzo Abe will boost efforts to spur growth.
The government will announce 12 trillion yen of fiscal stimulus this month to boost the nation’s shrinking economy, the Yomiuri newspaper said today. The extra budget for this fiscal year through March will include 5 trillion yen to 6 trillion yen of public-works spending, the newspaper reported, without saying where it obtained its information.
“The yen looks oversold,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “Still, we think the trend is still very strongly for a weaker yen and this is a breather. Policy actions could reinforce yen selling.”
The yen’s 14-day relative strength index versus the dollar dropped to 15.5 on Jan. 4, below the level of 30 that some traders view as a signal an asset has fallen too fast. The index was at 20.1 today.
Switzerland’s franc fell against 13 of its 16 major peers after Zurbruegg said that while the central bank is concerned about developments in the Swiss property market it can’t raise borrowing costs.
“We have a very special situation of interest rates at zero and that from a monetary policy standpoint we absolutely can’t raise rates,” he said in an interview with Swiss national television today.
The Swiss central bank kept its benchmark interest rate at zero percent on Dec. 13 and maintained the currency ceiling at 1.20 francs per euro. Its next decision is on March 14.
The franc weakened 0.1 percent to 92.54 centimes against the dollar and was little changed at 1.2088 per euro.