Tokyo - The yen gained against all of its major peers on haven demand as Japanese stocks led Asian equities lower.
The Japanese currency was the best performer in the past three months in a basket of 10 developed-nation currencies with a 7.9% climb. The dollar held gains from its best week since July as investors look for further signs that the US economy is strong enough for the Federal Reserve to raise interest rates by the end of this year.
“The yen is stronger all-around today on the back of falling stocks,” said Junya Tanase, chief foreign-exchange strategist at JPMorgan Chase in Tokyo. “There are US data and Fed officials speaking this week, but stocks dictate in the near term, with the yen being bought when equities decline.”
The yen strengthened 0.3% to ¥120.27/$ as of 08:16 in London, and climbed 0.5% to ¥134.41/€.
Japan’s Topix share index slumped 1% as more than 1 000 companies traded without the right to a dividend, while the MSCI Asia Pacific Index slid 0.3%.
Hedge funds and other large speculators reduced their net bets on yen weakness versus the dollar to 23 678 in the week to September 22 from the previous period, when such wagers quadrupled to 26 814.
“The global economic situation isn’t as bad as to warrant a further plunge” in stocks, said Koji Fukaya, the chief executive officer at FPG Securities in Tokyo, which provides over-the- counter currency derivative products for companies. “Financial markets aren’t volatile enough to spur active buying of the yen.”
The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, was little changed at 1 215.17 from 1 214.12 on Friday. The measure completed a 1% weekly advance, the biggest since July 17, and has climbed 2.9% this quarter.
The greenback advanced against all of its 16 major counterparts last week after a report on Friday showed the world’s largest economy expanded more than previously forecast in the second quarter and Fed Chair Janet Yellen said the central bank is on track to increase rates by December.
St. Louis Fed President James Bullard said Friday he’d “like to get going” on raising rates.
The greenback climbed 16% in the past year, according to Bloomberg Correlation-Weighted Indices, the best performer among the 10 currencies tracked. The euro rose 0.8% and the yen gained 4.3%.
The US government will release August figures for personal spending and prices on Monday before announcing payrolls for this month on October 2. Economists in a Bloomberg survey expect the hiring data to show continued improvement.
Central bank officials scheduled to speak this week include New York Fed President William C. Dudley, San Francisco Fed President John Williams and Yellen.
“US data this week is important and even if results are mixed, it won’t affect the baseline as the Fed made clear its intention to raise rates this year,” Fukyaya said. “The dollar is set to gain broadly.”