The euro approached a 10-month high against the dollar as Spain’s borrowing costs fell at a 4.5 billion-euro ($6 billion) sale of bonds, underscoring increased confidence in European debt markets.
The shared currency climbed against most of its 16 major peers, while the yen slid to the weakest level since 2010 after Economy Minister Akira Amari said his earlier comments that excessive weakening of the currency was harmful were misinterpreted. The Swiss franc fell to the weakest level versus the euro since the nation’s central bank imposed an exchange- rate cap in September 2011.
“Investors are reassured that we’re not going to see an imminent deterioration in Europe from a fiscal point of view,” Shaun Osborne, chief currency strategist at Toronto-Dominion Bank, said from Toronto in a telephone interview, “We’ve seen sovereign spreads narrow and market-stress indicators continue to improve.”
The euro appreciated 0.4 percent to $1.3347 at 12:44 p.m. New York time after climbing earlier as much as 0.7 percent. It touched $1.3404 on Jan. 14, the strongest level since Feb. 29. The euro rose 2.1 percent to 119.94 yen. Japan’s currency dropped as much as 1.7 percent to 89.91 per dollar, the weakest level since June 2010, before trading at 89.85.
The dollar pared its loss versus the euro after data showed U.S. housing starts rose 12.1 percent last month, more than forecast, and initial claims for unemployment benefits fell last week to 335,000, the lowest level since January 2008.
Implied volatility climbed for a third day, reaching a four-month high. JPMorgan Chase & Co.’s G7 Volatility Index, based on three-month options on Group of Seven nations’ currencies, reached 8.81 percent, the most since Sept. 3, exceeding its 200-day moving average of 8.74 percent. It fell to 7.06 on Dec. 18, the lowest since August 2007.
Switzerland’s currency slid against all of its 16 most- traded peers except the yen as speculation Europe’s debt crisis is easing sapped demand for haven assets. The franc weakened as much as 1 percent to 1.2490 per euro before trading at 1.2482, down 0.9 percent. The Swiss National Bank capped it at 1.20 per euro after it surged to 1.008 per euro in August 2011.
“People are going back into risk assets,” Eimear Daly, a currency-market analyst at Monex Europe Ltd. in London, said in an interview on Bloomberg Television’s “The Pulse” with Guy Johnson. “People were so concerned about risk and were holding the Swiss franc as a highly liquid asset; now the fear has abated, and that’s going to pull the euro up against the franc.”
The Hungarian forint gained versus 31 major peers after the minister in charge of aid talks with the International Monetary Fund, Mihaly Varga, said the currency should be stabilized in a stronger range, according to the commercial television broadcaster HirTV. The forint rose 1.3 percent to 219.08 per dollar and appreciated as much as 1.4 percent, its biggest intraday increase since Nov. 19.
Scandinavian currencies rose versus the greenback as investors sought riskier assets. The Norwegian krone gained against most major main peers, climbing as much as 0.7 percent before trading up 0.3 percent at 5.5565 per dollar. Sweden’s krona added 0.2 percent to 6.4926 to the greenback, and the Danish krone rose 0.4 percent to 5.5906.
Stocks rose, with the Standard & Poor’s 500 Index advancing 0.6 percent.
Australia’s dollar slid versus most major counterparts after a report showed employers in the country unexpectedly cut payrolls last month, adding to concern the domestic economy is slowing. Employment fell by 5,500 in December, compared with economist estimates for a 4,000-job increase.
The Aussie declined 0.4 percent to $1.0535. It climbed 1.4 percent to 94.71 yen.
Europe’s shared currency strengthened as Spain sold 2.409 billion euros of 3.75 percent 2015 notes at an average yield of 2.713 percent, down from 3.358 percent at the previous sale in December. It also auctioned securities maturing in 2018 and 2041 at lower yields.
The euro rose 2.2 percent over the past three months in a basket of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar added 0.2 percent, and the yen tumbled 13 percent in the worst performance.
The yen dropped, paring a two-day rally before the Bank of Japan reviews its inflation goal at a Jan. 21-22 meeting. Prime Minister Shinzo Abe has called for the target to be doubled to 2 percent and said he wants a new central-bank chief who can push through bold monetary policy as the government works to spur growth and defeat deflation. The current governor, Masaaki Shirakawa, is scheduled to step down in April.
“The market is waiting to see what measures are introduced next week,” said Antje Praefcke, a senior currency strategist in Frankfurt at Commerzbank AG. “We think that they have to deliver at their meeting and that, as well as the comments from Amari, are signs that yen is going to weaken.”
Economy Minister Amari told reporters today in Tokyo the yen is still correcting from excessive appreciation. He said Jan. 15 an excessively weak currency might hurt imports.
The yen will depreciate to 95 per dollar in the next six months, Praefcke predicted. It last traded at that level in August 2009, according to data compiled by Bloomberg.
The Japanese currency has found resistance this week at the 87.80-per-dollar level, which implies it now may continue weakening, Cilline Bain, a London-based technical analyst at Credit Suisse Group AG, wrote today in a client note. It might continue to decline through a support level at 89.67 and then to 90.84, Bain said, which would be its weakest since June 2010.
Resistance refers to an area on a chart where sell orders may be gathered, and support is where there may be buy orders.