The yen dropped to almost the weakest since August 2009 after the lower house of parliament endorsed Haruhiko Kuroda, an advocate of increased stimulus, as the next central bank governor.
The Dollar Index reached the highest level since August as a report showed initial claims for unemployment insurance fell more than forecast last week. Japan’s currency fell versus 13 of its 16 major peers as Kuroda’s approval cleared the first hurdle in Prime Minister Shinzo Abe’s plan to install a central-bank leadership in favor of more monetary stimulus. Australia’s dollar climbed to a one-month high after a report showed payrolls rose to the highest in almost 13 years, dimming the outlook for interest-rate cuts.
“The focus there is on the transition of the new leadership of the Bank of Japan,” Eric Viloria, a senior currency strategist at Gain Capital Group LLC in New York, said of the yen. “The pace and aggressiveness of easing is going to be something that we’re keeping our eye on.”
Japan’s currency declined 0.4% to 96.47 per dollar at 9:08 a.m. in New York after depreciating to 96.71 on March 12, the weakest level since August 2009. Japan’s currency fell 0.2% 124.84 per euro. The dollar strengthened 0.2% to $1.2940 per euro, touching the strong level since December.
Japanese lawmakers in the lower house, which is dominated by the ruling coalition, also approved Abe’s nominees Kikuo Iwata and Hiroshi Nakaso for the two deputy governor posts. The upper house, where Abe’s Liberal Democratic Party lacks a majority, is scheduled to vote tomorrow.
The Bank of Japan will be determined to get inflation toward its 2% target and that “will undermine the yen,” said Derek Mumford, a director at Rochford Capital, a currency risk-management company in Sydney. “We can see dollar strength for another three or four weeks -- I wouldn’t stand in front of this decisive market.”
The yen has slumped 7.9% this year, the worst performer among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar rose 3.6% and the euro gained 1.4%.
“Our advice to clients remains to short the Japanese yen,” said Arne Rasmussen, head of currency research at Danske Bank A/S in Copenhagen. “The government’s plan to push for more stimulus to support growth is likely to go ahead now that Kuroda is confirmed.” A short position is a bet an asset will fall.
Australia’s dollar rose against all 16 of its major counterparts as the statistics bureau said the number of people employed rose by 71,500 in February from the previous month, when it increased 13,100. That compared with a 10,000 increase estimated by economists in a Bloomberg survey.
“It’s a very strong employment number, and somewhat surprising given the challenges the Australian employment market is facing,” said Richard Grace, chief foreign-exchange strategist and head of international economics at Commonwealth Bank of Australia in Sydney. “The market that was primarily short the Australian dollar is now unwinding.”
Interest-rate swaps data compiled by Bloomberg show traders see a 7% chance the central bank will lower its benchmark to 2.75% at its next meeting on April 2. That’s down from 19% odds yesterday.
The Aussie rose 0.6% to $1.0355, after climbing to $1.0383, the strongest level since Feb. 6. The currency added 0.9% to 99.91 yen.
First-time U.S. jobless claims fell by 10,000 to 332,000 in the week ended March 9, the fewest since mid-January, according to data today from the Labor Department in Washington. The median forecast of 49 economists surveyed by Bloomberg called for an increase to 350,000. The four-week average declined to a five-year low.
The Dollar Index, which Intercontinental Exchange Inc. uses to track the greenback against currencies of six U.S. trading partners, gained 0.2% to 83.024 after rising to the highest level since Aug. 3.
“The data that we’ve seen recently has been really surprising to the upside, and the U.S. dollar has been responding positively to that,” Gain Capital’s Viloria said.
Norway’s krone fell the most in three weeks against the euro after central bank Governor Oeystein Olsen said in a statement that “the key policy rate may be kept low for longer than previously anticipated.”
The Norges Bank kept its overnight deposit rate at 1.5% today, a decision that was forecast by all 16 economists surveyed by Bloomberg News.
The krone slumped 1.1% to 7.5223 per euro, the biggest decline since July 27.