Wednesday, 10 June, 2015

Yen Gains After Kuroda Comments as Bunds Decline; Oil Advances

(Bloomberg) — The yen surged after Bank of Japan Governor Haruhiko Kuroda said it was hard to see his nation’s currency falling further. Bunds fell and oil rose, while emerging-market stocks ended their longest losing streak since 1990. Japan’s currency jumped 1.2 percent, the most this year, to 122.81 per dollar as of 9:32 a.m. London time. Germany’s 10-year bund yield surpassed 1 percent for the first time since September and oil in New York advanced 2.2 percent. The MSCI Emerging Markets Index rose for the first time in 13 days, the Stoxx Europe 600 Index was little changed and U.S. futures contracts rose. Hong Kong stocks fell after local officials said they were testing a woman for fever. The yen reached a 13-year low last week, prompting the economy and finance ministers to express concern about “abrupt” and “rough” moves in currency markets. Oil’s 27 percent rally since the end of January has stoked inflation expectations, cutting the appeal of fixed payments from bonds. Greek Prime Minister Alexis Tsipras plans to meet the leaders of Germany and France in Brussels on Wednesday. “Japanese officials clearly don’t like to see their currency moving in one direction too fast,” said Sue Trinh, a senior currency strategist at Royal Bank of Canada in Hong Kong. “What we’ve seen recently is a rather abrupt run-up in dollar-yen. No central banker would really like to see that in their exchange rate.” The yen reached 122.46, the strongest since May 26, after Kuroda told parliament the currency has returned to levels it was at before the collapse of Lehman Brothers Holdings Inc. He cited the real effective exchange rate, which is adjusted for inflation rates and trade with other nations. The currency touched 125.86 on June 5, the weakest since June 2002. Dollar Declines As the yen climbed, the dollar dropped versus all 16 major counterparts, weakening 0.4 percent to $1.1332 per euro. The greenback tumbled 1.4 percent against the Norwegian krone after data showed inflation in Norway accelerated faster than economists estimated. Bonds tumbled across the euro area, with Portugal’s 10-year yield rising above 3 percent for the first time since Nov. 24. Italy’s 10-year yield rose seven basis points to 2.36 percent. The yield on 10-year Treasury notes increased three basis points to 2.47 percent, reaching the highest since October. U.K. 10-year gilt yields climbed four basis points to 2.14 percent. Bank of England Governor Mark Carney and Chancellor of the Exchequer George Osborne are due to speak at the Mansion House dinner after markets close in London on Wednesday. Retail Sales Economists see almost a 40 percent chance that the Federal Reserve will delay a rate increase beyond September if jobs gains stumble or inflation fails to move higher, according to a Bloomberg News survey. Investors are looking ahead to retail sales data in the U.S. Thursday, after last week’s jobs report showed the strongest hiring in five months. West Texas Intermediate oil was headed for its highest settlement since June 2, climbing to $61.20 a barrel following Tuesday’s 3.4 percent jump. Brent advanced 1.4 percent to $65.81 a barrel. Crude inventories dropped by 6.7 million barrels through the week ended June 5, the industry-funded American Petroleum Institute reported on Tuesday, according to a person familiar with the data. Analysts surveyed by Bloomberg are predicting a 1.5 billion-barrel decline in government data due Wednesday. Hong Kong Fever Hong Kong’s Hang Seng Index fell 1.1 percent to the lowest close in two months. The city’s health department said a woman had been isolated in hospital after developing a fever. She last month traveled to South Korea, where Middle East respiratory syndrome has killed nine people. The Stoxx 600 was trading near its lowest since February. Energy and commodity producers posted the biggest gains, while technology companies led declines. Greece’s ASE Index fell. AMS AG slumped 20 percent after a report said the chipmaker may have lost Apple Inc. as a client for the next generation of the iPhone maker’s products. Dialog Semiconductor Plc dropped 2.9 percent. Solvay SA gained 3.3 percent after the Belgian maker of chemicals and plastics increased the target for a profit-boosting program. S&P 500 E-mini futures expiring this month climbed after the index closed near a two-month low. The cost of insuring corporate debt rose, with the Markit iTraxx Europe Index of credit-default swaps up 0.5 basis point at 70 basis points, the highest level since October, according to data compiled by Bloomberg. Average yields on investment-grade bonds in euros climbed to an almost 10-month high of 1.36 percent, Bank of America Merrill Lynch data show. The Markit iTraxx Financial Index linked to the senior debt of 30 European banks and insurers increased to a 13-month high of 80 basis points, Bloomberg data show. India, Poland The MSCI Emerging Markets Index added 0.7 percent as benchmark gauges in India, Poland, Taiwan, Thailand and Turkey gained at least 1 percent. A Bloomberg gauge of 20 currencies climbed 0.5 percent. The ruble strengthened 1.7 percent, gaining for a fourth day as oil rose. The won jumped 1 percent after Kuroda signaled Japan policy makers weren’t seeking further depreciation in the yen. China’s Shanghai Composite Index decreased 0.2 percent, paring losses of as much as 2.2 percent. MSCI Inc. held off from adding mainland equities to its benchmark indexes, saying it expects to include A shares after settling investor concerns about accessibility and share ownership through collaboration with the China Securities Regulatory Commission. Hong Kong’s Hang Seng China Enterprises Index slid 1.8 percent. Thailand’s baht strengthened for a third day. The central bank will probably keep its benchmark interest rate unchanged at 1.5 percent, according to a Bloomberg survey of economists. Copper Rises Copper rose for a fourth day, the longest streak in a month, before China industrial production data Thursday that’s forecast to show an improvement in activity. Nickel, aluminum and zinc also rose. Wheat in Chicago climbed after excessive rain in parts of the U.S., dry conditions in Canada and hot weather in Europe raised supply concerns. Prices advanced for a third day, climbing 0.9 percent to $5.3675 a bushel, near the $5.3725 reached on Tuesday, which was the highest since April 6. Archr LLP is Authorised and regulated by the Financial Conduct Authority (FCA reference 617163). Archr LLP is not covered by the Financial Services Compensation Scheme (FSCS). Archr is registered in England and Wales No. OC371018. 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