By Emma Charlton & Kristine Aquino - Oct 16, 2013 4:23 AM PT
The yen weakened after U.S. Senate leaders said they’ll resume talks on raising the debt limit, spurring optimism a U.S. default will be avoided and damping demand for the currency as a haven.
Japan’s currency fell versus all of its 16 major counterparts as U.S. stock futures rose with Senate discussions representing the clearest path to a deal. The pound climbed to a one-week high after U.K. jobless claims fell last month. New Zealand’s dollar rose to the strongest in four weeks as quickening inflation boosted speculation the central bank will raise interest rates. South Korea’s won advanced amid demand for higher-yielding assets.
Oct. 15 (Bloomberg) -- House Minority Leader Nancy Pelosi, a Democrat from California, talks about the outlook for an agreement avoiding a U.S. debt default and ending the partial government shutdown, following a meeting between House Democrats and President Barack Obama. House Minority Whip Steny Hoyer also speaks. (Source: Bloomberg)
Oct. 15 (Bloomberg) -- Thierry Wizman, global interest rates and currency strategist at Macquarie Group Ltd., and William Hoagland, a senior vice president at the Bipartisan Policy Center, talk about the negative rating watch placed on U.S. debt by Fitch Ratings. They speak with Pimm Fox on Bloomberg Television's "Taking Stock." (Source: Bloomberg)
Oct. 15 (Bloomberg) -- White House Press Secretary Jay Carney speaks about the U.S. government shutdown and debt ceiling. Carney, speaking at a White House news briefing, also comments on the Obama administration's health-care overhaul. (Source: Bloomberg)
“The broad view is that whatever is going on in terms of the political spat, there will be a deal,” said Gavin Friend, a currency strategist at National Australia Bank Ltd. in London. “If people think there’s going to be a deal, equity markets will go up and the yen will tend to fall.”
The yen declined 0.2 percent to 98.34 per dollar at 7:21 a.m.New York time after strengthening 0.4 percent yesterday. Japan’s currency dropped 0.4 percent to 133.29 per euro after depreciating to 133.83 yesterday, the weakest since Sept. 26. The dollar slipped 0.2 percent to $1.3554 per euro.
U.S. Senate leaders are trying to complete an agreement to end the fiscal impasse that has caused a partial government shutdown, stepping in after House Republicans’ last-minute plan to avert a default collapsed. A Senate accord may be announced as early as today, though passage in the Republican-led House is far from assured. U.S. borrowing authority lapses tomorrow.
‘Pretty Quickly’
Failure to reach a deal would probably see the dollar weaken “pretty quickly” toward the 96 yen level, said Jim Vrondas, chief currency and payment strategist at OzForex Ltd. in Sydney. The dollar was last lower than 96 yen on Aug. 12.
The Bloomberg U.S. Dollar Index, which tracks the greenback against 10 major peers, fell 0.2 percent to 1,010.71. The gauge has stayed in range of 0.9 percent this month as traders waited to see if lawmakers would reach a deal on the budget deficitand debt ceiling. The range was 3.2 percent in September.
JPMorgan Chase & Co.’s G-7 Volatility Index, a measure of price swings among Group of Seven nations’ currencies, dropped to 8.17 percent yesterday, the lowest level since Jan. 23. It rose today to 8.26 percent.
Pound Rises
The pound advanced for a third day versus the dollar as the Office for National Statistics said U.K. claims for unemployment benefits fell 41,700, the biggest decline since June 1997.
The jobless rate as measured by International Labour Organisation standards was unchanged at 7.7 percent in the three months through August.
“We suspect a lot of good news is now priced into the pound,” Derek Halpenny, European head of global-markets research at Bank of Tokyo-Mitsubishi UFJ Ltd. in London, wrote in a note to clients. The recent strength has been “primarily driven by optimism over the economic outlook,” he said.
Sterling climbed 0.2 percent to $1.6033 after appreciating to $1.6059, the highest since Oct. 9.
New Zealand’s dollar gained for a fourth session as the statistics bureau said consumer prices increased 0.9 percent in the third quarter, the fastest pace since the period ended June 2011. An industry report released this week showed home prices climbed to a record in September.
‘Remain Strong’
“New Zealand is almost the only developed country with a rate increase coming into sight, so the kiwi is likely to remain strong,” said Kengo Suzuki, chief currency strategist at Mizuho Securities Co. in Tokyo. Markets are expecting the central bank to raise interest rates “because of the resilient economy and inflation concerns.”
The kiwi rose 0.4 percent to 84.16 U.S. cents after increasing to 84.31 cents, the highest level since Sept. 19.
The won advanced 0.1 percent to close at 1,065.69 per dollar in Seoul after reaching 1,065.44, the strongest since Jan. 23.
South Korea’s adjusted jobless rate declined to 3 percent in September, the lowest level since December 2012, a government report showed today.
To contact the reporters on this story: Emma Charlton in London at echarlton1@bloomberg.net; Kristine Aquino in Singapore at kaquino1@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
