Yen set for longest monthly decline in 12 years on BOJ easing

Italy Election

Strategists surveyed by Bloomberg News predict the yen will be at 97 per dollar by Dec. 31.

In Italy, President Giorgio Napolitano took charge of the search for the next prime minister after Pier Luigi Bersani was unable to assemble a majority in the divided parliament. Napolitano will consult political leaders today.

The euro rallied yesterday after Cyprus averted panic withdrawals as banks opened for the first time in almost two weeks, with government controls on access to cash leading to orderly lines rather than runs on deposits.

“The re-emergence of concerns in Italy poses downside risks to the euro, as Bersani has been unable to form a government, thus far,” Morgan Stanley strategists led by Hans- Guenter Redeker wrote in an e-mailed note to clients yesterday. Markets will focus on economic data “to see if this volatility is spilling over to real output.”

Euro Manufacturing

A final reading of a gauge of euro-area manufacturing by London-based Markit Economics will probably confirm a 20th month of contraction in March, according to the median estimate of economists surveyed by Bloomberg News. Markit will publish the figures on April 2. Two days later, European Central Bank officials will gather for a monetary policy decision, when they are expected to hold the benchmark interest rate at a record-low 0.75%, a separate poll of analysts showed.

The Australian dollar added 0.1% to $1.0416, extending its quarterly gain to 0.2%. On April 2, Reserve Bank of Australia Governor Glenn Stevens will probably refrain from lowering his nation’s interest rate for a third meeting this year, according to all 28 economists surveyed by Bloomberg News.

The central bank has reduced the key rate by 1.75 percentage points to 3% since the beginning of November 2011.

Bloomberg News

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