The yen dropped from the strongest in three weeks against the dollar as U.S. stock futures signaled gains after five days of losses, damping demand for safer assets.
Japan’s currency fell versus all of its 16 major peers having rallied against all of them so far in 2015. The dollar climbed to a nine-year high versus the euro before the Federal Reserve releases minutes of its December meeting amid signs policy makers are moving toward raising interest rates. The euro fell for a fourth day before a report that economists said will show consumer prices in the region fell for the first time since 2009. Malaysia’s ringgit slumped for a fourth day.
“Equity declines have moderated in Tokyo trading,” said Kumiko Ishikawa, a currency analyst at Gaitame.com Research Institute Ltd. “While the drop in stocks and oil could be seen as a bit overdone, there’s still a strong sense of risk aversion in the market. The yen is weakening now, but I don’t expect it will suddenly drop back to 120 per dollar.”
The yen fell 0.6 percent to 119.04 per dollar at 6:51 a.m. in London after appreciating to 118.06 yesterday, the strongest level since Dec. 17. Japan’s currency slid 0.4 percent to 141.26 per euro. The dollar gained 0.2 percent to $1.1867 per euro after advancing to $1.1843, the most since February 2006.
Futures on the Standard & Poor’s 500 Index expiring in March gained 0.3 percent. Stocks have slumped around the world this year as oil tumbled to the lowest level since 2009 and Greece began an election campaign that may result in the nation leaving the euro.
The yen has strengthened 2.7 percent in 2015, the best performer of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar gained 2 percent, while the euro weakened 0.2 percent.
Intercontinental Exchange Inc.’s U.S. Dollar Index, which tracks the currency against six major peers, rose 0.4 percent to 91.741 after climbing to 91.899, the highest level since December 2005.
Today’s Fed minutes may offer insight into the meaning of the central bank’s guidance that it will be “patient” when considering the timing of the first rate increase since 2006. After its Dec. 16-17 gathering, Chair Janet Yellen said the Fed was unlikely to raise borrowing costs at the next couple of meetings, in January and March.
The euro is heading for a seventh monthly loss versus the dollar amid speculation European Central Bank President Mario Draghi will begin large-scale bond purchases known as quantitative easing to help counter deflation.
“The only real brake on the euro downtrend this quarter should be its popularity, with investors already heavily on board,” said Sean Callow, a currency strategist at Westpac Banking Corp. in Sydney. “With Draghi looking increasingly likely to override German objections to QE at the Jan. 22 ECB meeting and the U.S. economy firmly on track for higher interest rates this year, any euro bounces should be modest.”
The ringgit extended its worst start to a year since the Asian financial crisis as the slump in oil prices puts pressure on the government’s fiscal deficit target.
1Malaysia Development Bhd., the state investment firm, failed to repay a loan of more than $500 million last month, the Edge Financial Daily reported this week. The company has never defaulted, said Arul Kanda, who was named president of the company this week.
“The oil price drop is hurting a lot,” said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. in Singapore. “The missed fiscal payment from the sovereign investment fund is not going to help. It underscores the negative sentiment that Malaysia is facing.”
The ringgit dropped 0.6 percent to 3.5775 per dollar, having slumped 2.2 percent this year.