Yen ends 3-day losing streak after Japan election

The yen rose for the first time in four days against the dollar amid speculation further policy measures may be needed to weaken the currency after Prime Minister Shinzo Abe’s coalition cemented control of parliament.

Japan’s currency (FOREX:USDJPY) climbed against all of 16 major peers after dropping last week before the July 21 poll. The euro rose to the highest level in a month versus the greenback after Portuguese President Anibal Cavaco Silva said the current government will stay in office and he doesn’t want to call early elections. Australia’s dollar climbed after officials in China moved to scrap a rule that had constrained bank lending. Indonesia’s rupiah snapped a record losing streak.

“It boils down to your faith in Abenomics and whether or not you think he’s going to be able to push his agenda further, and more importantly whether that’s really good for the yen,” Gerry Celaya, a senior currency strategist at Aberdeen, Scotland-based Redtower Asset Management, said in a phone interview. “We’ve priced in a lot and we need something to deliver here. In our view, it’s going to have to come from the Bank of Japan.”

Japan’s currency strengthened 1.2% to 99.43 per dollar at 10:42 a.m. New York time and gained as much as 1.4%, the biggest intraday jump since July 11. The yen rose 0.8% to 131.21 per euro. The euro appreciated 0.6% to $1.3217 and touched $1.3218, the strongest since June 21.

The yen has weakened 10% this year, the biggest decline among 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar appreciated 4.9% and the euro advanced 4.7%.

U.S. Housing

The dollar extended losses versus the euro and yen after sales of previously owned homes in the U.S. unexpectedly fell in June. They dropped 1.2% to a 5.08 million annualized rate, the National Association of Realtors reported today. Economists in a Bloomberg survey called for a 5.26 million pace.

Australia’s dollar strengthened after the People’s Bank of China said July 19 it was ending a floor on borrowing costs previously set at 30% below the benchmark rate. China is Australia’s biggest trading partner.

The Aussie climbed 0.9% to 92.52 U.S. cents.

The rupiah advanced on speculation global funds bought the nation’s debt to tap higher yields.

Overseas investors added 1.24 trillion rupiah ($122 million) to their local-currency sovereign note holdings this month through July 15, following a 19.98 trillion rupiah outflow in June, finance ministry data show. The five-year yield reached 7.68% on July 16, the highest since March 2011.

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