Yen rallies on G-7 comments while U.S., Europe stocks advance

The yen jumped as an official from the Group of Seven nations said the countries are concerned about volatility in Japan’s currency. U.S. stocks advanced as investors dissected earnings reports and awaited President Barack Obama’s State of the Union speech tonight.

The yen climbed 0.8% to 93.57 per dollar at 4 p.m. in New York, paring a gain of as much as 1.4%. The Standard & Poor’s 500 Index climbed 0.2%, rising to the highest since November 2007 on a closing basis, and the Stoxx Europe 600 Index closed up 0.5%. Spain’s 10-year bond yields fell 10 basis points to 5.32%. Industrial metals led commodities higher, while corn slid for an eighth day in its longest slump since 2010.

Japan’s currency was higher against all 16 major peers after the G-7 official, who requested not to be further identified, said the group is concerned about excess moves in the yen and investors misinterpreted an earlier statement on exchange rates. The clarification came hours after the world’s major industrial economies appeared to signal acceptance for a weaker Japanese currency so long as Prime Minister Shinzo Abe’s government didn’t actively pursue devaluation.

“It was a vague, bland statement at first,” Joe Manimbo, a market analyst at Western Union Business Solutions, a unit of Western Union Co., said by telephone from Washington, D.C. “When we got the subsequent clarification, it showed officials were really concerned about the pace of yen weakness, which they seem to see as a potential threat to global growth.”

Yen Watch

The yen has weakened 18% against the dollar since its 2012 high in February amid speculation of further stimulus measures to bolster Japan’s economy. The yen slumped against the dollar yesterday as Haruhiko Kuroda, a possible contender for Bank of Japan governor, said additional monetary easing could be justified this year. U.S. Treasury Undersecretary Lael Brainard said she supports Japan’s effort to end deflation after the yen slid for four straight months through the end of January.

The yen climbed 0.5% to 125.87 per euro. The Dollar Index, a gauge of the U.S. currency against six major peers, slipped 0.3% to 80.08. The pound weakened against 15 of 16 major peers as U.K. inflation last month held at the highest since May.

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