The yen rose against all of its 16 major counterparts, marking the first broad-based move this year, as increased concern of slowing economic growth spurred investor appetite for safe assets.
The Japanese currency appreciated against the tenders of commodity-exporting countries, led by South Africa’s rand, after a private report showed manufacturing may shrink in China for a fifth month. A similar report in Europe helped spur a drop in the euro against the yen. Consumer confidence likely rose this month in the U.S., economists said before the report next week.
“The general risk-off tone that was popular throughout the week” supported the yen, said Joe Manimbo, a market analyst in Washington at Western Union Business Solutions, a unit of Western Union Co. “For the first time in months, Japan managed a trade surplus and that suggests that maybe the Japanese economy is in better shape than some had feared.”
The yen rose 1.3 percent to 82.35 per dollar this week in New York in its biggest such gain since the final week of 2011. The South African rand fell 2.9 percent to 10.7234 yen. The euro strengthened 0.6 percent to 109.27 yen and added 0.7 percent to $1.3270.
Implied volatility of three-month options of Group of Seven currencies, which signals traders’ expectations for price fluctuations, was 10.14 percent yesterday, according to the JPMorgan G7 Volatility Index, down from the high this year of 12.37 percent Jan. 3.
Yen Bets
Futures traders decreased their bets that 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 25,821 on March 20, compared with net shorts of 42,380 a week earlier.
The Japanese currency breached its 21-day moving average against the euro of 108.61, which will lead to further yen appreciation, with support between 105.43 and 106.8, MacNeil Curry, head of foreign-exchange and interest-rates technical strategy at Bank of America Corp. in New York, wrote in a note. Support refers to a level where buy orders may be clustered.
Signs of slower growth in the world’s second-largest economy drove investors to sell currencies of countries such as Australia, whose biggest trading partner is China.
China Slows
A preliminary reading of an index from HSBC Holdings Plc and Markit Economics released March 21 showed Chinese manufacturing may contract. The gauge fell to 48.1 in March, the lowest level in four months and compared with a final reading of 49.6 for February. Figures below 50 indicate contraction.
BHP Billiton Ltd., the world’s biggest mining company whose biggest customer is China, is re-evaluating spending plans amid slowing Chinese growth, the Australian Financial Review reported March 20, citing comments by Chairman Jacques Nasser to investors.
The Aussie lost 1.2 percent to $1.0467 and decreased 2.5 percent to 86.18 yen. It was the second worst performance among the major currencies.
“Higher-yield currencies are really sensitive to global growth prospects and that’s really been a concern with all the data that’s come out this week,” said Eric Viloria, senior currency strategist at Gain Capital Group LLC in New York.
European Economy
The euro slumped against the yen after a euro-area composite index based on a survey of purchasing managers in manufacturing and services dropped to 48.7 from 49.3 in February, London-based Markit Economics said in an initial estimate March 22. Economists forecast a gain to 49.6, according to the median of 21 estimates in a Bloomberg News survey. A reading below 50 indicates contraction.
The 17-nation currency gained against the dollar after Greece’s Prime Minister Lucas Papademos won approval for a 130- billion-euro ($173 billion) aid package. U.S. Treasury Secretary Timothy F. Geithner said March 21 that “Greece is making progress toward sustainability.”
The yen surged by the most since August against the dollar on March 22 after Japan reported an unexpected trade surplus for last month, adding to evidence of a rebound in the economy.
Japan’s finance ministry reported exports exceeded imports by 32.9 billion yen ($400 million) in February. Economists surveyed by Bloomberg had predicted a shortfall of 120 billion yen. Exports fell by 2.7 percent from a year earlier, less than the 6.5 percent drop projected.
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