“Quite a lot is priced in for the Bank of Japan to do, and there’s still a lot to happen,” said Geoff Kendrick, head of European currency strategy at Nomura International Plc in London. “Markets are backing off a bit. Short-term, we may need to see some action to sustain the move lower.”
The yen has tumbled 6.8% in the past month, the worst performer of the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar weakened 0.4% and the euro gained 1%.
Sweden’s krona fell versus all its major counterparts after the minutes of the central bank’s Dec. 17 meeting showed deputy governors Per Jansson and Barbro Wickman-Parak “thought a great deal” about cutting the repurchase rate by half a percentage point last month.
The Riksbank on Dec. 18 lowered its benchmark by a quarter of a percentage point to 1%. While Deputy Governor Lars E.O. Svensson voted to cut the rate by 0.5% point, both Jansson and Wickman-Parak considered such a reduction before joining the majority decision of the six-person board, the minutes showed.
The krona dropped 0.6% to 8.5818 per euro and slid 0.9% to 6.5601 per dollar.
Investors should sell the krona at 8.5650 per euro, targeting a decline to 8.80, BNP Paribas strategists led by Steven Saywell in London, wrote in a note to investors. The krone last traded at 8.80 per euro on Dec. 17.
The pound fell toward the weakest level in a month against the dollar after an industry report showed U.K. retail sales slowed in December, adding to signs Britain’s economy is lagging behind U.S. growth.
Sterling dropped before a Bank of England meeting this week at which policy makers are forecast to keep interest rates at a record low as they struggle to stoke a recovery. The U.K. economy shrank 0.1% last year, while the U.S. expanded 2.2%, according to a Bloomberg News surveys.
“U.S. growth is outperforming U.K. to such an extent that the last time we saw this kind of a differential was pretty much in the 1980s,” said Peter Kinsella, a senior foreign-exchange strategist at Commerzbank AG in London. “Definitely you’ll see lower levels in cable over the course of the year,” he said, referring to the pound-dollar exchange rate.
The pound dropped 0.4% to $1.6056 after falling to $1.6010 on Jan. 4, the lowest level since Dec. 7. The U.K. currency was little changed at 81.45 pence per euro.
Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.