Yen weakens to 6-month low on risk-linked selling

Global Trend

“There is further evidence that the global manufacturing cycle appears to be strengthening,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “Kuroda has also been speaking again, reiterating that the BOJ will continue to ease monetary policy until inflation stabilizes at 2%. All these developments reinforce the yen weakening trend.”

A U.K. factory index expanded to 58.4, the highest since February 2011, and more than the median forecast of 56.1 in a Bloomberg survey.

The pound climbed 0.4% to 82.72 pence per euro after appreciating to 82.53, the strongest since Jan. 11.

The pound has jumped 7.5% in the past six months, the best performer among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes amid speculation a strengthening economy will prompt the Bank of England to increase borrowing costs. The euro appreciated 3.6%, while the dollar fell 1%.

Dollar Rise

The dollar climbed before reports this week that economists said will show U.S. manufacturing expanded and employers added jobs last month.

The Institute for Supply Management will say today its index for U.S. manufacturing was 55.2 last month from 56.4 in October, another Bloomberg survey showed. Economists predict a Dec. 6 Labor Department report will indicate the world’s biggest economy added 180,000 jobs in November after a 204,000 gain in the previous month.

“The data out of the U.S., the ISM and, of course, the payrolls on Friday, is probably going to be the more important focus for the market,” Todd Elmer, a currency strategist in Singapore at Citigroup Inc., said in a Bloomberg Television interview. “If we see another 200-plus number, I think that the market is going to bring forward its taper expectation.”

Federal Reserve officials said they may reduce their $85 billion in monthly bond purchases “in coming months” as the economy improves, according to minutes of their October meeting released last month.

The Canadian dollar dropped as much as 0.4% to C$1.0654, the weakest since Oct. 4, 2011. The currency fell for the second day before a central bank meeting Dec. 4 where policy makers are projected to hold the benchmark interest rate at 1%.

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