Sept. 30 (Bloomberg) -- The dollar fell against the yen, reversing early gains, on speculation a Federal Reserve official will reiterate today that record-low interest rates will be unchanged for an extended period.
The U.S. currency headed for a quarterly decline against 14 of 16 major counterparts as Asian stocks rose and before a report this week forecast to show American employers cut fewer jobs, boosting demand for higher-yielding assets. Australia’s dollar climbed to a 13-month high against the greenback on better-than-forecast retail sales, bolstering speculation the Reserve Bank of Australia will raise rates as early as November.
“Fed policy makers will probably keep low borrowing costs unchanged until next summer, weighing on the dollar,” said Akira Hoshino, chief manager of the foreign-exchange trading department in Tokyo at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan’s largest lender.
The dollar dropped to 89.79 yen as of 1:07 p.m. in Tokyo from 90.09 yen in New York yesterday. It fell to as low as 88.24 yen on Sept. 28, the weakest level since Jan. 23. For the quarter, the dollar has declined 6.8 percent against the yen.
The euro advanced to $1.4617 from $1.4587. Yesterday, it touched $1.4527, the lowest level since Sept. 14. The euro has risen 4 percent against the dollar this quarter.
Japan’s currency fetched 131.25 per euro from 131.40 in New York yesterday. The yen has gained 3 percent against the euro this quarter. The MSCI Asia Pacific Index of regional shares added 0.5 percent.
Fed’s Kohn
The dollar retreated from near a two-week high against the euro before Fed Vice Chairman Donald Kohn speaks on a panel in Washington about the central bank’s exit policies. Kohn earlier this month said a swift increase in U.S. interest rates is unlikely.
“With the global economy quite weak and inflation low, a large and rapid rise seems quite improbable,” Kohn said at the Brookings Institution in Washington on Sept. 10.
The Bank of Japan may decide as soon as next month to let its emergency corporate-debt buying programs expire as businesses regain access to private funding, people with direct knowledge of the discussions said.
The decision would echo steps by central banks to pare back unprecedented measures to unfreeze credit as the financial industry stabilizes. At the same time, because Japan’s economic recovery is threatened by rising unemployment and deflation, policy makers are likely to keep the benchmark interest rate target near zero into next year, analysts said.
U.S. Payrolls
The U.S. Labor Department is forecast to report payrolls fell by 180,000 workers in September, the smallest drop since August 2008, according to the median estimate of economists in a Bloomberg News survey. The data is due on Oct. 2.
The Australian currency rose against all of its 16 major counterparts as retail sales climbed 0.9 percent in August after dropping 0.9 percent in July, the Bureau of Statistics said today. The median forecast of economists surveyed by Bloomberg News was for a 0.5 percent gain.
“The market’s focus was on the retail sales number which had a very strong result,” said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. in Sydney.
The Australian dollar rose 1 percent to 87.88 U.S. cents. It earlier touched 87.99, the highest since August 2008. Australia’s currency gained 9 percent against its U.S. counterpart this quarter.
To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.
Last Updated: September 30, 2009 00:13 EDT
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