The dollar was set for its biggest weekly gain versus the yen in more than two months, having surged after Federal Reserve Chairman Ben S. Bernanke made the case for U.S. stimulus to be withdrawn as the economy improves.
The greenback was poised for a weekly gain against all 16 of its major peers before reports next week that economists said will show U.S. home prices and durable-goods orders increased. The yen slid versus most of its major counterparts today as a gain in stocks reduced demand for safer assets. South Korea’s won dropped to a one-year low after the nation’s financial regulator said it will intensify monitoring of foreign-exchange markets. The Australian dollar pared a weekly decline.
“For the remainder of the year we think the dollar will rally, pretty much across the board,” said Alvin Tan, a director of foreign-exchange strategy at Societe Generale SA in London. “The Fed is becoming more hawkish relative to other central banks and the Bank of Japan is just starting on its massive quantitative-easing program. Monetary-policy divergence will drive the dollar ahead.”
The dollar rose 0.4 percent to 97.67 yen at 7:02 a.m. New York time, set for a 3.6 percent gain this week, the most since April 5. The U.S. currency was little changed at $1.3213 per euro. The yen fell 0.3 percent to 129.03 per euro after dropping as much as 1.1 percent.
The Dollar Index rose 1 percent on June 19 when the Federal Open Market Committee left the monthly pace of bond purchases at $85 billion, saying “downside risks to the outlook for the economy and the labor market” have diminished.
Durable Goods
The U.S. Commerce Department will say on June 25 that durable-goods orders rose 3 percent in May, expanding for a second month, according to a Bloomberg News survey of economists. An industry report the same day will show the S&P/Case-Shiller (SPCS20Y%) index of property values gained 10.6 percent in April from a year earlier, according to another survey.
The Dollar Index, which IntercontinentalExchange Inc. uses to monitor the greenback against the currencies of six U.S. trade partners, was little changed at 81.894, having gained 1.5 percent this week. The gauge will climb to 85.70 by year-end, according to the median forecast of economists and strategists surveyed by Bloomberg.
The yen has fallen 2.7 percent this week against the euro, poised for the biggest slide since the period ended April 5, the same week the Bank of Japan said it will buy more than 7 trillion yen of bonds every month.
Shares Advance
Japan’s Nikkei 225 (NKY) Stock Average added 1.7 percent while the Stoxx Europe 600 Index gained 0.6 percent and Standard & Poor’s 500 Index futures rose 0.7 percent.
The JPMorgan Global FX Volatility Index was at 11.32 percent after touching 11.51 percent, matching yesterday’s advance to the highest since June 2012. The average in the past year is 8.66 percent.
The won dropped for a second day as overseas investors sold more of the nation’s stocks than they bought for an 11th day.
The Financial Supervisory Service said yesterday it will strengthen monitoring of foreign-exchange markets after the U.S. central bank signaled June 19 it may start reducing bond purchases this year.
“Since Bernanke’s comments about the possible early stimulus exit globally investors are buying the dollar,” said Hong Seok Chan, an analyst at Daishin Economic Research Institute inSeoul. “The government could intervene if market volatility increases.”
The won fell 0.7 percent to close at 1,154.15 per dollar after depreciating to 1,159.33, the weakest since June 2012.
The Bloomberg-JPMorgan Asia Dollar Index (ADXY), which tracks the region’s 10 most-active currencies, rose 0.2 percent today, trimming this week’s decline to 1 percent, the biggest since September 2011.
Australia’s dollar pared a weekly decline that saw it fall to the lowest since September 2010 yesterday. It gained 0.3 percent to 92.28 U.S. cents, still set for a weekly loss of 3.6 percent, the most since September 2011.
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