June 10 (Bloomberg) -- The yen rose the most in almost a month versus the euro on speculation Bank of Japan stimulus will be sufficient to boost the economy while the European Central Bank will expand currency-debasing measures to revive growth.
Japan’s currency strengthened against all of its 16 major peers, with analysts surveyed by Bloomberg News predicting the BOJ will keep stimulus unchanged when policy makers meet June 12-13. Its biggest gains came versus the euro as data pointed to subdued inflation and production in the 18-nation currency bloc. Australia’s dollar touched a three-week high.
“The economic data has been mixed but clearly not to the level that would warrant further action at this month’s meeting” of the BOJ, said Peter Rosenstreich, chief foreign- exchange analyst at Swissquote Bank SA in Geneva. “Cyclical stimulus seems to be working while, structurally, sentiment has shifted. This might indicate less artificial support from the BOJ, and that should underpin the yen.”
Japan’s currency strengthened 0.6 percent to 138.60 per euro at 6:57 a.m. New York time, the biggest advance since May 8. The yen appreciated 0.2 percent to 102.33 per dollar. One- month implied volatility in the pair, a gauge of expectations for future price swings, rose to 5.47 percent after falling to a record 5.25 percent yesterday.
BOJ Governor Haruhiko Kuroda is scheduled to hold a press conference after the BOJ’s next policy decision on June 13 amid speculation his policies are leading to an improvement in financial markets and the economy. The central bank has been buying about 7 trillion yen ($68.4 billion) of government bonds a month since April 2013. All 33 economists surveyed by Bloomberg News expect the central bank will keep policy unchanged at the meeting.
The euro weakened for a third day against the dollar after a report showed a slower pace of inflation in the Netherlands than economists forecast in May, bolstering speculation that the ECB will persist with measures to boost the economy. Separate data showed a drop in French industrial production in April from a year ago.
ECB policy makers led by President Mario Draghi last week cut the deposit rate to minus 0.1 percent, lowered the main refinancing rate to a record 0.15 percent and announced measures including targeted long-term loans.
“The most important thing from the foreign-exchange point of view, it’s the signal that the ECB will run around with very low rates for a long time,” said Ulrich Leuchtmann, head of currency strategy at Commerzbank AG in Frankfurt.
The 18-nation currency weakened 0.4 percent to $1.3545, after dropping to $1.3503 on June 5, the lowest since Feb. 6. The euro declined 1.8 percent this year, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies.
In the U.S., retail sales increased 0.6 percent in May following a 0.1 percent advance the previous month, the Commerce Department will say June 12, according to the median forecast of economists surveyed by Bloomberg.
“We are going to see a stronger second half” for U.S. economic growth, Federal Reserve Bank of Boston President Eric Rosengren said yesterday. “I don’t see significant financial concerns at this time,” he said, referring to stability in financial markets.
The Aussie was little changed at 93.66 U.S. cents after climbing to 93.76 cents, the strongest level since May 19. The currency gained after China’s central bank announced measures to support smaller companies and agriculture, supporting the outlook for growth in Australia’s largest trading partner.
The Aussie appreciated 5.4 percent this year, the best performance in the Bloomberg Correlation-Weighted Indexes. The U.S. dollar dropped 0.2 percent, while the yen gained 3 percent.
The People’s Bank of China announced a 0.5 percentage point cut in reserve requirements for some banks. The reduction will take effect June 16, it said in a statement yesterday.
China’s inflation accelerated in May to the fastest pace in four months on food costs, while a decline in factory-gate prices moderated, data today showed. Consumer prices rose 2.5 percent from a year earlier, exceeding the median 2.4 percent estimate in a Bloomberg survey.