Jan. 17 (Bloomberg) -- The yen and dollar weakened against most of their major counterparts after China’s gross domestic product expanded more than economists estimated and as advances in Asian stocks reduced the appeal of haven currencies.
The Australian dollar climbed versus 15 of its 16 major peers on prospects demand for the nation’s commodities will be sustained in China, Australia’s biggest export market. The yen retreated from near an 11-year high against the euro before U.S. data today projected to show manufacturing in the New York region expanded in January at the fastest pace in eight months. Singapore’s dollar strengthened after a report showed the city state’s exports unexpectedly gained in December.
“The stronger-than-expected China GDP helped boost risk sentiment in the markets a little bit,” said Minoru Shioiri, chief manager of foreign-exchange trading Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo. “Risk assets such as the Aussie dollar and stocks are higher, while the dollar and yen are being sold.”
The yen depreciated 0.4 percent to 97.64 per euro as of 2:13 p.m. in Tokyo after rising to 97.04 yesterday, the strongest level since December 2000. The dollar lost 0.5 percent to $1.2728 per euro, breaking a two-day gain. The greenback was little changed at 76.72 yen. U.S. markets were closed yesterday for a holiday.
China’s economy expanded 8.9 percent in the three months ended Dec. 31 from a year earlier, the statistics bureau said today. Economists in a Bloomberg News survey had estimated an 8.7 percent gain.
‘Hard Landing’
The Australian dollar climbed 0.6 percent to $1.0378 and reached $1.0398, the strongest since Nov. 9. The so-called Aussie appreciated 0.1 percent to 81.54 euro cents, after earlier touching a record high of 81.64. The MSCI Asia Pacific Index of shares rose 1.2 percent, boosting the allure of higher- yielding currencies.
Today’s GDP report “certainly allays fears that China is going to see a hard landing and that is generally seen as a positive for the world,” said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. in Singapore. “It’s hard to get too downbeat in the near term” about the Australian and New Zealand dollars.
The Federal Reserve Bank of New York’s general economic index rose to 11 this month, the highest since May, according to economist projections before the data. Readings higher than zero signal expansion.
Declines in the yen and dollar were limited before the European Financial Stability Facility, Spain and Greece sell bills today amid concern rating cuts by Standard & Poor’s will sap demand for European debt.
EFSF Downgrade
S&P yesterday removed the AAA rating for the EFSF, which is designed to fund rescue packages for Greece, Ireland and Portugal, after reducing the top grades of France and Austria by one level on Jan. 13. The company also downgraded Italy, Portugal and Spain.
The euro area’s bailout fund is scheduled to sell 1.5 billion euros ($1.9 billion) of bills. Greece will also offer bills, while Spain will auction securities maturing in 364 and 518 days.
“You can’t help becoming fairly pessimistic about the euro,” said Marito Ueda, senior managing director in Tokyo at FX Prime Corp., a currency margin company. “The EFSF’s downgrade limits options available for European leaders to overcome the sovereign crisis, and poor results at today’s auction are likely to lead to euro selling.”
The common currency has lost 4.2 percent over the past six months, according to the Bloomberg Correlation-Weighted Indexes. The yen has risen 9.3 percent, the best performance among the 10 currencies tracked by the gauges, while the dollar has advanced 7.4 percent.
Greek Talks
Greece will resume talks tomorrow with the Institute of International Finance, which represents private creditors, Greek Finance Minister Evangelos Venizelos has said. The Washington- based IIF broke off talks last week after failing to agree with the government about how much money investors will lose by swapping their bonds.
“Greece will default very shortly because even the debt exchange that has been proposed is a default by our definition,” Moritz Kraemer, S&P’s managing director of European sovereign ratings, said yesterday in an interview with Bloomberg Television. “It’s a distressed exchange.”
A German index of investor and analyst confidence in the economic outlook was minus 49.4 in January, according to a Bloomberg News survey of economists before the ZEW Center for European Economic Research releases the data today. While it would be an improvement from minus 53.8 in December, the gauge would be below zero for an eighth month.
Singapore’s dollar advanced 0.4 percent to S$1.2861 versus its U.S. counterpart after non-oil domestic exports jumped 9 percent last month from a year earlier, compared with the median forecast in a Bloomberg survey for a 1.2 percent decrease. A surge in pharmaceutical overseas sales offset a slump in electronics shipments.
(businessweek.com)
