The yen declined against all of its major peers after a White House official said President Barack Obama will nominate Janet Yellen today to head the Federal Reserve, sapping demand for safer assets.
The Bloomberg U.S. Dollar Index rose from near its lowest close in seven months before the Fed releases minutes of last month’s meeting when it unexpectedly refrained from trimming bond purchases. The dollar rose for a second day against the euro as the congressional standoff that’s halted the release of economic data and risks a breach of the U.S. debt limit continues. The euro gained versus the yen before a report forecast to show German industrial production rebounded.
Oct. 9 (Bloomberg) -- Timothy Riddell, Singapore-based head of Asian global markets research at Australia & New Zealand Banking Group, talks about the expected nomination of Janet Yellen as chairman of the Federal Reserve and its implications for financial markets. He speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
“The Yellen news did put a bit more positive risk sentiment in the market and you saw the yen weaken,” said Peter Dragicevich, a currency strategist in Sydney at Commonwealth Bank of Australia (CBA), the nation’s biggest lender. “The view is that Yellen is obviously quite dovish and markets could take that as a sign that policy will remain accommodative for a more extended period of time.”
The yen declined 0.1 percent to 131.68 per euro at 8:54 a.m. London time, weakening for a second day. It fell 0.5 percent to 97.34 per dollar. The U.S. currency rose 0.3 percent to $1.3528 per euro.
The Bloomberg U.S. Dollar Index added 0.2 percent to 1,012.16. It fell to 1,007.87 on Oct. 3, the lowest closing level since Feb. 20.
Fed Vice Chairman Yellen, 67, would succeed Chairman Ben S. Bernanke, whose term ends on Jan. 31. She was the favorite in surveys of economists and had the backing of 20 members of Obama’s Democratic Party in the Senate.
The announcement will come today during an event at the White House, the official said in an e-mailed statement. Both Yellen and Bernanke will be present.
“Yellen’s policy stance is very similar to Bernanke’s, or seen by some as even more dovish than him,” said Shinichiro Kadota, a foreign-exchange strategist at Barclays Plc in Tokyo. “A dovish Fed would keep a lid on U.S. yields,” weighing on the dollar, he said.
The greenback has declined 1.8 percent over the past month, the worst performance after the Canadian dollar among 10 developed-market currencies tracked by Bloomberg Correlation Weighted Indexes. The euro gained 0.5 percent, the yen 0.8 percent and the pound 0.7 percent.
The Fed refrained from reducing the $85 billion pace of monthly bond buying on Sept. 18, saying it needs more evidence of lasting improvement in the economy. That may be harder to ascertain with U.S. official data from payrolls to retail sales delayed by the partial government shutdown that began on Oct. 1.
“It’s going to mean that the data over the next couple of months is actually going to be distorted and unhelpful,” Timothy Riddell, the Singapore-based head of Asian global markets research atAustralia & New Zealand Banking Group Ltd. (ANZ), said in a Bloomberg Television interview. Markets are putting off expectations of tapering into next year and most likely after Yellen takes office, he said.
U.S. House Speaker John Boehner insisted yesterday on immediate negotiations with Obama, rejecting the president’s stance that he’ll talk only after the shutdown ends and the risk of default is pushed back. Republicans have sought spending cuts and changes to Obama’s healthcare law. The U.S. borrowing authority lapses on Oct. 17.
Industrial production in Germany rose 1 percent in August after declining 1.7 percent in the previous month, a report today will show, according to the median estimate in a Bloomberg News survey of economists.
Australia’s dollar advanced versus the dollar and yen before a report tomorrow that analysts said will show jobs gained in September.
The nation’s employers added 15,000 workers last month after cutting 10,800 in August, according to the median estimate of economists surveyed by Bloomberg before the data. If confirmed, that would be biggest increase since April.
The Aussie climbed 0.2 percent to 94.39 U.S. dollars and strengthened 0.6 percent to 91.86 yen.