Yen advances as investors seek safety

The yen (CME:J6M14) gained versus most of its 31 major counterparts as weaker-than-forecast economic reports on China and concern Ukrainian turmoil may worsen fueled demand for safety.

The euro (CME:ECM14) earlier reached the highest level against the dollar in more than two years amid speculation policy makers are optimistic at prospects for the currency bloc’s economic recovery. The greenback remained lower versus most major currencies even as U.S. retail sales rose for the first time in three months and jobless-benefit claims fell.

Since shortly after the retail-sales data, “it’s been one way down for dollar-yen,” Brad Bechtel, managing director at Faros Trading LLC in Stamford, Connecticut, said in a phone interview. “Ukraine is definitely out there, of course, and is adding tension.”

The yen rallied 0.7% to 102.04 per dollar at 12:19 p.m. New York time and touched 101.97, the strongest level since March 4. The Japanese currency gained 0.5% to 142.10 per euro. Europe’s shared currency appreciated 0.2% to $1.3928 after touching $1.3967, the highest since October 2011.

Secretary of State John Kerry told a Senate panel that if there’s no sign of resolution of the standoff between Russia and Ukraine over the Crimea region, there will be “very serious” steps next week from Europe and the U.S.

China’s retail sales increased at a weaker-than-forecast 11.8% annual pace in the first two months of the year and the nation’s growth in industrial production slowed to an 8.6% rate, reports showed.

Yields fall

The yen extended its advance against the dollar as yields on U.S. Treasury 10-year notes fell, dimming the appeal of dollar-denominated assets. The yields dropped seven basis points, or 0.07 percentage point, to 2.66%, the lowest level since March 4. They increased earlier to 2.75%.

Deutsche Bank AG’s Currency Volatility Index, based on three-month implied volatility on nine major currency pairs, rose for the first time in four days. It was at 7.18%, after reaching 7.14% yesterday, the lowest level since December 2012.

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