The yen fell for a third day, trading at almost 100 per dollar, as a decline in the U.S. jobless rate to a four-year low fueled optimism that growth is gathering pace and reduced demand for Japan’s currency as a haven.
The euro strengthened against the yen as data showed the region’s services and manufacturing industries shrank less in April than initially estimated. Australia’s currency slid after a report today showed retail sales shrank. The Malaysian ringgit rose to the highest in 1 1/2 years against the dollar after Prime Minister Najib Razak’s coalition was re-elected. Sweden’s krona weakened as a report showed the nation’s services industry performed worse than economists predicted.
“That at the very least is keeping dollar yen supported,” Geoffrey Yu, a senior currency strategist in London at UBS AG, said of last week’s U.S. employment report. “Risk is slightly adjusting.”
The yen slid 0.2% to 99.23 per dollar as of 9:31 a.m. New York time after touching 99.45, the weakest level since April 25. It dropped to a four-year low of 99.95 on April 11. It depreciated 0.2% to 130.04 per euro. The 17-nation currency was little changed at $1.3105.
Markets in Japan and the U.K. are closed today for a holiday.
The yen depreciated beyond 99 per dollar on May 3 for the first time in a week after a U.S. Labor Department report showed employment picked up more than forecast and the jobless rate declined to 7.5%. Payrolls expanded by 165,000 workers last month following a revised 138,000 increase in March that was larger than first estimated.
“If risk appetite on the market remains unchanged the yen will remain under pressure,” said Antje Praefcke, a senior currency strategist at Commerzbank AG in Frankfurt. The yen “has approached the 100 mark again. This was caused by the U.S. labor market data for April, which surprised on the upside.”
The world’s biggest currency dealers predict the dollar will strengthen as U.S. growth accelerates in the second half of the year. Deutsche Bank AG, Citigroup Inc., UBS AG and Barclays Plc forecast an advance of as much as 9% versus the euro by Dec. 31.
The dollar has gained 1.3% over the past six months, according to Bloomberg Correlation-Weighted Indexes that track 10 developed market currencies. The euro has risen 3.9%.
The yen has slumped about 20%, the worst performer on the indexes, in anticipation of expanded stimulus from the Bank of Japan that culminated in the April 4 decision to double monthly bond purchases in pursuit of a 2% annual inflation target.
“The dollar-yen move was an obvious one on the back of the payrolls,” said Jeremy Stretch, head of currency strategy at Canadian Imperial Bank of Commerce in London. “There’s an element of reducing some of the pessimism that was starting to build up. There was a lot of uncertainty about the durability of the U.S. recovery.”
The euro advanced against the majority of its top peers, gaining the most against the South African rand and the Australian dollar.
A composite index based on a survey of purchasing managers in the manufacturing and services industries in the euro region increased to 46.9 last month from 46.5 in March, London-based Markit Economics said. While above an initial estimate of 46.5 published on April 23, it was still below 50, indicating contraction. Retail sales declined for a second month in March, separate data showed.
In Australia, retail sales unexpectedly fell 0.4% in March after gaining 1.3% the previous month, a government report showed today. Economists surveyed by Bloomberg predicted a gain of 0.1%.
There’s a 51% chance that the Reserve Bank of Australia will lower its benchmark 3% rate when it meets tomorrow, Bloomberg calculations based on overnight-index swap rates indicate.
The so-called Aussie weakened 0.9% to $1.0231.
The Malaysian ringgit gained as much as 2.3% to 2.9625 per dollar, the strongest since September 2011. Najib’s coalition extended its 55-year rule, giving him a mandate to continue his economic reforms and deliver $444 billion of infrastructure and other investments by 2020.
The Swedish krona depreciated 0.2% to 6.5184 per dollar.
An index based on responses from purchasing managers rose to a seasonally adjusted 48.6 in April from 47.3 the previous month, Stockholm-based Swedbank, which compiles the index, said today. A reading below 50 signals a contraction. The median estimate of five economists surveyed by Bloomberg was for the reading to increase to 49.