Fed Governor Jeremy Stein said he views “the fundamentals of our underlying policy stance as broadly unchanged.” The Fed is providing more clarity about how it will wind down its $85 billion in monthly bond buying as unemployment falls toward 7%, he said.
The Thomson Reuters/University of Michigan said its final index of confidence eased to 84.1 this month from 84.5 at the end of May, which was the highest since July 2007. The median forecast in a Bloomberg survey of economists called for 83 in the gauge after a preliminary reading of 82.7.
The yen has slumped 8.2% this year, the worst performer of 10 developed-nation currencies tracked by Bloomberg Correlation Weighted Indexes. The dollar gained 6.5% and the euro strengthened 4.9%.
“Risk appetite is putting downward pressure on the yen,” said Niels Christensen, chief currency strategist at Nordea Bank AB in Copenhagen. “Fears about liquidity and growth in China have also receded a bit so the sentiment has been quite bullish in equities in the past two or three days.”
Chinese stocks advanced for the first time in eight days as People’s Bank of China Governor Zhou Xiaochuan pledged to maintain money-market stability, easing concern the nation is facing a cash crunch.
“The safe-haven support for the yen is fading,” BNP Paribas SA currency strategists Vassili Serebriakov and Daniel Katzive in New York wrote in a research note. “We continue to see significant gains in dollar-yen over the next six months targeting 108 by year-end.”
The euro rose versus most of its 16 major counterparts as Germany’s Federal Statistics Office said retail sales climbed 0.8% in May, surpassing the prediction of 0.4% in a Bloomberg News survey.
“Investors are finding it hard to sell the euro and there’s a growing realization of that,” UBS’s Yu said.
The retail sales growth follows reports this month showing German unemployment unexpectedly declined in June, while the Ifo institute’s measure of business confidence climbed for a second month and ZEW’s investor sentiment index increased.
The Bloomberg U.S. Dollar Index, which tracks the dollar against 10 major currencies weighted by liquidity and trade flows, gained 0.4% to 1,041.04, increasing this week’s advance to 0.6%.