mini yen futures

Yen futures fall against Euro

August 7th, 2012

Euro Futures – The euro rose against the yen and dollar after Germany backed European Central Bank President Mario Draghi’s proposals to stem the region’s debt crisis.

The shared currency gained versus most of its 16 major counterparts as a report showed Italy’s economy shrank less than economists predicted. Euro gains were supported as the European Union said it had received no requests for the region’s rescue fund to buy government bonds. Norway’s krone climbed after manufacturing increased.

“There’s a slightly risk-on tone to the market this morning,” Greg Anderson, the North American head of G-10 currency strategy at Citigroup Inc. in New York, said in a telephone interview. “It’s leading into the closing of shorts, because that’s where the market was positioned last week. The market will continue to pay most attention to European policy and headlines.” A short position is a bet a security will decline.

The euro rose 0.6 percent to 97.62 yen at 9:07 a.m. New York time after climbing to 97.80 yen yesterday, the strongest level since July 12. The 17-nation currency appreciated 0.2 percent to $1.2427, a third day of gains. The yen fell 0.4 percent to 78.54 per dollar.

The 17-nation currency gained 0.2 percent in the past week versus nine developed-nation counterparts tracked by the Bloomberg Correlation-Weighted Indexes. The yen was the worst performer, falling 1.5 percent, while the greenback decreased 1 percent.

Draghi’s Plan

Draghi outlined a plan last week under which the ECB may buy debt of struggling euro-bloc countries in tandem with the region’s bailout fund, while saying the details still need to be worked out over the coming weeks.

Germany is “not worried” by Draghi’s Aug. 2 statement on possible bond purchases, Chancellor Angela Merkel’s deputy spokesman Georg Streiter said in Berlin yesterday.

“The fact that the German spokesperson made an official statement for the first time about the country’s backing of ECB bond purchases is supporting the euro,” said Ken Takahashi, assistant vice president of global markets at Sumitomo Mitsui Trust Bank Ltd. in New York. “The market is reassessing the ECB’s decision and taking a more positive view on it.”

Norway’s manufacturing production gained 0.8 percent in June from May, when it rose a revised 0.6 percent, the Oslo- based statistics agency said in a statement today. The median prediction of three economists in a Bloomberg News survey was for a 0.4 percent gain.

The Norwegian krone climbed for a third day against the dollar, rising 0.6 percent to 5.9235. The currency was 0.4 percent stronger against the euro at 7.3647.

Pound, Franc

Britain’s pound strengthened after a government report showed industrial output fell less in June than economists predicted, suggesting the recession was less pronounced in the second quarter than previously reported. Sterling rose 0.5 percent to $1.5675 and increased 0.2 percent to 79.35 pence per euro.

The Swiss franc rose against the dollar and was little changed against the euro after Switzerland’s central bank said foreign-currency reserves surged to a record in July amid the defense of the currency’s ceiling.

The franc rose 0.1 percent to 96.74 centimes per dollar and was at 1.20170 per euro, from 1.20150 yesterday.

Switzerland’s cash pile swelled 11.3 percent in the month to 406.5 billion Swiss francs, the Swiss National Bank (SNBN) said on its website today. That pushed holdings to a record 71 percent of GDP, according to the government’s forecast for 2012. Walter Meier, an SNB spokesman in Zurich, said “a large part” of the increase resulted from currency purchases to defend the exchange rate limit.

Italy, Germany

Italian gross domestic product declined 0.7 percent in the second quarter, Istat, the Rome-based national statistics institute, said in a preliminary report today. The median estimate in a Bloomberg News survey of economists was for a 0.8 percent decline. GDP fell 2.5 percent from a year earlier.

The euro held gains even after Germany’s Economy Ministry in Berlin said factory orders dropped 1.7 percent from May, when they rose 0.7 percent. Economists projected a 0.8 percent decline.

Australia’s dollar rose to the strongest since March against the U.S. currency after the Reserve Bank said current policy settings were “appropriate.” RBA Governor Glenn Stevens and his board said in a statement the nation’s growth was close to trend.

“The RBA hasn’t really set out a case for lowering interest rates, so I suspect that’s probably maybe a surprise to the markets,” said Annette Beacher, head of Asia-Pacific research at TD Securities in Singapore. The overall statement “seemed to be quite bullish for the Aussie dollar.”

The so-called Aussie appreciated 0.1 percent to $1.0583 after reaching $1.0604, the strongest level since March 20.

- Joseph Ciolli in New York and Lukanyo Mnyanda in Edinburgh at Bloomberg.