Yen weakens as investors seek riskier assets

The yen (FOREX:USDJPY) weakened versus the majority of its major peers as investors sought higher-yielding assets amid an advance in global stocks.

Japan’s currency reached a five-year high versus the euro (FOREX:EURJPY) before three Federal Reserve officials speak today as speculation grows that the U.S. central bank may begin to trim its monthly bond-buying as soon as next week. Norway’s krone rose after touching an almost four-year low against the euro and Australia’s dollar dropped.

“Given that we’re in a situation where risk is positive, which helps equities, dollar-yen is going to go higher,” Dan Dorrow, the head of research at Faros Trading in Stamford, Connecticut, said in a phone interview. “Risk is rallying.”

The yen declined 0.1% to 103.05 per dollar at 8:52 a.m. New York time. It touched 103.38 on Dec. 3, the weakest since May 23. The Japanese currency slid 0.3% to 141.41 per euro after touching 141.55, the least since October 2008. The 17-member euro rose 0.1% to $1.3722.

Futures on the Standard & Poor’s 500 Index (CME:SPZ13) of stocks rose 0.2%. The MSCI World Index increased 0.1%, following a 0.9% jump at the end of last week, while the Stoxx Europe 600 Index was little changed after advancing 0.7% on Dec. 6.

Futures Positions

Futures traders increased bets the yen will decline against the dollar, figures from the Washington-based Commodity Futures Trading Commission show. The difference in the number of wagers by hedge funds and other large speculators on a decline in the yen compared with those on a gain -- so-called net shorts -- was 133,383 on Dec. 3, the most since July 2007, and compared with bearish bets of 123,202 a week earlier.

Australia’s dollar halted a two-day gain versus its U.S. counterpart on prospects the local economy will lag behind an improvement in U.S. growth, damping demand for the South Pacific nation’s assets. The Aussie fell 0.2% to 90.83 U.S. cents.

Norway’s krone strengthened amid bets recent declines were overdone and as oil prices rose. West Texas Intermediate traded near the highest in almost six weeks, with WTI for January delivery at $97.71 a barrel in electronic trading on the New York Mercantile Exchange.

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