Yen Strengthens on Kuroda Comments as Energy Stocks Slip
Japan’s yen climbed after a speech by central bank Governor Haruhiko Kuroda, and the cost of insuring Japanese debt against default fell the most in two weeks. Asian energy producers retreated as oil held declines before a meeting of crude-producing countries tomorrow.
The yen gained against all 16 major peers by 3:48 p.m. in Tokyo, climbing at least 0.5 percent against the currencies of Australia, New Zealand and Norway amid declining commodity prices. Santos Ltd. led declines among oil producers as Brent crude weakened 0.3 percent in London. The Shanghai Composite Index rose a second day after the central bank cut interest rates. Standard & Poor’s 500 Index futures dropped 0.1 percent.
The Bank of Japan is commited to achieving its target of 2 percent inflation and that will make it costly for companies to hoard cash, Kuroda said in a speech to business leaders in Nagoya. A U.S. home-price gauge is due today, along with the Federal Reserve’s preferred inflation measure, while gross domestic product growth in the three months through Sept. 30 is likely to be revised lower. A final reading on German third-quarter economic expansion is due after data yesterday showed an unexpected increase in business confidence.
“Two big economies, China and Japan, are both easing monetary policy more aggressively and that should be supportive of growth through next year,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion. “Government policy actions are going to be supportive for risk assets like equities.”
The yen climbed 0.4 percent to 117.85 per greenback today. The currency weakened against 12 of its 16 major counterparts yesterday, falling 0.4 percent. It hit a seven-year low of 118.98 to the dollar on Nov. 20.
The euro slipped 0.1 percent to $1.2429, while the dollar gained 0.2 percent to 6.7961 Norwegian krone. The Bloomberg Dollar Spot Index fluctuated after closing at a five-year high.
South Korea’s won was little changed at 1,109.24. Investors are betting the country’s central bank will cut rates to shore up growth as the weakening yen pressures exports. The June 2015 median estimate of strategists fell 7.1 percent this quarter to 1,097 per dollar compared with a 6 percent drop in the outlook for Japan’s yen, Bloomberg surveys show.
West Texas Intermediate crude traded at $75.71 a barrel after declining 1 percent in the previous session. Members of the Organization of Petroleum Exporting Countries will meet in Vienna on Nov. 27 to decide on production after oil plunged about 30 percent since June. Brent crude oil retreated to $79.33 a barrel in London after sliding 0.9 percent yesterday.
Australia’s benchmark stock index fell 0.5 percent as BHP Billiton Ltd., the world’s biggest mining company and the southern country’s No. 1 oil producer, retreated 2.4 percent. Santos plunged as much as 6.1 percent, the most since February last year.
PetroChina Co. and China Petroleum & Chemical Corp., Asia’s two biggest oil companies, accounted for about 86 percent of the net decline by Hong Kong’s Hang Seng China Enterprises Index today. The measure jumped 3.8 percent yesterday. The Hang Seng Index swung between gains and losses today.
The Shanghai Composite Index rose 1.3 percent today, extending yesterday’s three-year high. A 29 percent rally in the benchmark index since January, combined with the yen’s decline versus the dollar, mean that mainland China’s equity market is closing in on Japan as the largest outside the U.S.
Interest-rate swaps sank to a two-year low as the People’s Bank of China said it sold 5 billion yuan ($814 million) of the contracts at 3.2 percent today, down from 3.4 percent at the last auction on Nov. 20. The one-year swap, the fixed payment needed to receive the floating seven-day repo rate, dropped as much as six basis points to 2.83 percent, the lowest since August 2012.
“Following the benchmark interest-rate cut, today’s reduction shows we remain in the rate-cutting cycle,” said Liu Dongliang, a Shanghai-based analyst at China Merchants Bank Co. “There should be further cuts in rates and we don’t rule out the possibility the PBOC will halt repos or even start reverse repos next month.”
In the U.S., the S&P 500 has rebounded 11 percent from a six-month low last month. It has closed above its five-day moving average for 27 consecutive trading sessions, the longest such streak in history, according to Jonathan Krinsky, chief market technician at MKM Holdings LLC.
Teargas was fired to disperse crowds near a police station in Ferguson, Missouri, after a grand jury decided not to indict a white police officer for shooting dead a black teenager on Aug. 9.
The grand jury, composed of nine whites and three blacks, declined to charge Darren Wilson, 28, for the Aug. 9 killing of Michael Brown, 18, in a street encounter, St. Louis County Chief Prosecutor Robert P. McCulloch announced today.
In Germany, the Ifo institute’s business climate index, based on a survey of 7,000 executives, advanced to 104.7 in November from 103.2 in October, data yesterday showed. Economists predicted a decline to 103, according to the median of 41 estimates in a Bloomberg survey.
The euro-area’s largest economy grew 0.1 percent over the period, economist estimate today’s release will show. European Central Bank President Mario Draghi’s is endeavoring to win support for more stimulus measures to boost the currency bloc’s flagging economy.
“While Draghi is showing a positive attitude towards more easing, economic indicators are getting better in Europe,” said Toshihiko Matsuno, chief strategist at SMBC Friend Securities Co. in Tokyo.