Yen rallies most in 3 years as BOJ refrains from added stimulus

Aussie Falls

Australia’s dollar touched its weakest level since 2010 versus the greenback as the nation’s statistics bureau said April home-loan approvals rose 0.8%, versus the 2% advance estimated by economists and a revised 4.8% gain in March.

The currency decreased 0.2% to 94.48 U.S. cents after reaching the lowest since Sept. 10, 2010.

“Housing is the one area most likely to make up for the mining investment downturn, and it’s disappointed,” said Joseph Capurso, a Sydney-based foreign-exchange strategist at Commonwealth Bank of Australia. “You’ve got to say that the Aussie’s going to keep on falling.”

The Philippine peso fell for a fifth day against the dollar after official figures showed overseas shipments from the Philippines slipped 12.8% in April. That compares with a 5.3% estimate in a Bloomberg survey of economists. The jobless rate climbed to the highest in three years.

Ringgit Down

Malaysia’s ringgit weakened on speculation the Federal Reserve will cut its monetary stimulus, slowing inflows into emerging-market assets.

The peso fell 0.5% to 43.085 per dollar. Malaysia’s currency depreciated 0.7% to 3.15 per dollar, according to data compiled by Bloomberg. It touched 3.1615, the weakest level since July 27.

JPMorgan Chase & Co.’s G-7 Volatility Index, based on currency option premiums, reached 10.55%. It touched 10.62% on June 7, the highest level since June 2012. Yields Italy’s 10-year government securities rose eight basis points to 4.37%, while Spanish 10-year yields added six basis points to 4.66%.

The BOJ kept unchanged its plan for a 60 trillion-yen to 70 trillion-yen annual increase in monetary base, the central bank said after a two-day meeting ended today. All but three of 23 analysts in a Bloomberg News survey either forecast that the BOJ would approve two-year or longer loan operations at the policy meeting or said such a move was possible.

Kuroda said after the meeting that the central bank would discuss longer fund operations when needed.

BOJ Projections

“Most investors didn’t expect any action, but a handful of players thought officials might have done something to put a lid on rising bond yields,” Joe Manimbo, a market analyst at Western Union Business Solutions, a unit of Western Union Co., said in a telephone interview from Washington. “Since that didn’t materialize, we’ve seen a sharp selloff in the Nikkei. They didn’t do much to instill optimism that Japan is leaning towards more action to settle markets.”

The yield on Japan’s benchmark 10-year bond climbed five basis points to 0.89%. It has swung from an all-time low of 0.315% to as much as 1% since the BOJ announced in April a plan to double monthly bond purchases to more than 7 trillion yen.

The yen has climbed 6.2% in the past month, the best performer among 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar was down 0.3% and the euro has risen 2.5%.

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