Yen climbs on finance minister comments as Italian bonds decline

The yen (FOREX:USDJPY) strengthened as Japan’s finance minister damped speculation the government will cut the corporate tax rate, while the pound climbed. Italian bonds, European stocks and U.S. index futures declined.

The yen appreciated against all but one of its 16 major peers at 7:56 a.m. in New York. Sterling advanced 0.4% against the dollar after Bank of England Governor Mark Carney told a U.K. newspaper he does not support increasing asset purchases. The yield on Italian bonds jumped and the Stoxx Europe 600 Index slipped 0.4% following a debt auction. Standard & Poor’s 500 Index futures fell 0.5%. Oil lost 0.5% in New York and gold gained 1.2%.

Japanese Finance Minister Taro Aso told reporters today that reducing the corporate tax rate needs to be considered over a medium- to long-term perspective. Britain, France, the U.S., Russia and China agreed on a resolution requiring Syria to give up its chemical weapons, which the full Security Council of the United Nations will discuss today. The U.S. Senate plans to vote today on an emergency budget to prevent a shutdown of the federal government when the new financial year starts on Tuesday. The bill must then return to the House.

“The market is obviously looking at the comments by minister Aso,” said Jeremy Stretch, head of currency strategy at Canadian Imperial Bank of Commerce in London, in a telephone interview. “If you are concerned about shutdown risks then it probably does provide a little avenue of opportunity just to see the yen make some gains.”

Strengthening Yen

The yen strengthened 0.5% to 98.51 per dollar and climbed 0.3% to 133.15 per euro. The pound rose 0.4% to $1.6102, after climbing to $1.6163 on Sept. 18, its highest level since Jan. 11.

“Given the recovery has strengthened and broadened, I don’t see a case for quantitative easing and I have not supported it,” Carney said, according to the Yorkshire Post.

Italian government bonds declined, extending a weekly loss, as the nation auctioned 6 billion euros ($8.1 billion) of debt maturing in 2018 and 2024. The yield on the country’s 10-year securities climbed seven basis points to 4.40%. Italy’s Rome-based Treasury sold 3 billion euros of the 2024 bonds at an average yield of 4.5%, more than the 4.46% at a previous auction on Aug. 29.

Italy’s government bonds fell amid speculation that traders who deal directly with the Treasury had to hold on to most of the securities on offer at today’s auction as political tension deterred other buyers.

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