The yen was poised for the biggest weekly drop against the dollar since August amid prospects the Bank of Japan (8301) will boost stimulus measures, reducing demand for the nation’s assets as a haven.
Japan’s currency fell versus all but one of its 16 major peers as the premium investors demand for holding U.S. two-year Treasuries instead of their Japanese counterparts reached the highest in two months. The yen was poised for the biggest five- day decline in nine weeks against the dollar. The euro headed for a weekly gain against the greenback as European leaders committed to their goal of creating a regional bank supervisor by year-end.
“There’s growing speculation that the Bank of Japan is going to ease monetary policy further,” said Janu Chan, an economist at St. George Bank Ltd. in Sydney. “That’s likely to keep the yen under a bit of pressure.”
The yen was little changed at 79.36 per dollar at 8:56 a.m. London time, after depreciating yesterday to 79.47, the weakest since Aug. 21. It’s down 1.2 percent this week, the biggest slide against the greenback since the five days through Aug. 17. It’s set for a seventh daily drop, the longest losing streak since April 2011.
The Japanese currency lost 0.1 percent to 103.70 per euro. It slid as much as 0.6 percent to 104.14 yesterday, the weakest since May 8. The shared currency was little changed at $1.3068, up 0.9 percent since Oct. 12.
BOJ Meeting
BOJ policy makers meet again on Oct. 30 and will release updated economic projections for the 2012 and 2013 fiscal years, along with the first set of forecasts for the 12 months beginning in April 2014. At their last meeting, which ended on Oct. 5, central bank officials held off from more easing after adding to stimulus in September.
U.S. two-year note yields exceed similar maturity Japanese securities by 19 basis points, or 0.19 percentage point, close to the most since August.
“The yen is looking softer on the back of growing expectations about additional BOJ easing and rising U.S. Treasury yields,” said Yasuhiro Kaizaki, president of global markets at Sumitomo Mitsui Trust Bank Ltd. in New York. “The dollar would probably be well-supported against the yen heading into the BOJ meeting.”
The Dollar Index (DXY), which IntercontinentalExchange Inc. uses to track the greenback against currencies of six U.S. trading partners, was little changed at 79.36.
Ichimoku Cloud
The greenback may extend gains to 82 yen, the highest since April 6, after rising above the so-called cloud on the daily ichimoku chart, Osamu Takashima, Tokyo-based currency strategist at Citigroup Inc., wrote in a report yesterday. The dollar’s 21- day moving average, currently 78.36 yen, acts as key support, he wrote.
Ichimoku charts are used to predict a currency’s direction by analyzing the midpoints of historical highs and lows. The cloud refers to the area between the first and second leading span lines on the chart and is used to show an area where trading orders may be clustered.
The euro headed for weekly gains against most major counterparts as European Union chiefs meet in Brussels for a second day today to tackle the region’s debt crisis.
The EU will seek to agree on a framework that makes the European Central Bank the main bank supervisor by Jan. 1, according to conclusions released early today. The new system, intended to break the link between banks and governments at the root of the region’s financial crisis, will be phased in over the next year and could cover all 6,000 euro-area banks by Jan. 1, 2014.
The euro rose 0.4 percent in the past week, according to Bloomberg Correlation-Weighted Indexes tracking 10-developed market currencies. The yen was the worst performer dropping 1.9 percent and the dollar lost 0.7 percent.
An index of consumer confidence in the euro area was at minus 26 in October from 25.9 the previous month, according to the median estimate of economists surveyed by Bloomberg News before the data on Oct. 23. That would be the lowest since May 2009.
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