The yen rose against the dollar, headed for its biggest weekly
gain in a decade, on speculation a global stock-market rout will prompt
investors to pare holdings of higher-yielding assets funded with the
Japanese currency.
The yen was on course for its largest weekly
gain versus the euro as the Dow Jones Industrial Average and Nikkei 225
Stock Average both fell below 9,000 for the first time since 2003.
Group of Seven finance ministers and central bankers meet today and
tomorrow in Washington to discuss financial turmoil that has wiped more
than $8 trillion off the value of global stocks this month and led to
interest-rate cuts and bank bailouts in most of the member nations.
The
yen has surged 28 percent versus the Australian dollar, 20 percent
against New Zealand's currency and 11 percent against the euro this
month as investors pared so-called carry trades, in which investors get
funds in nations such as Japan that have low borrowing costs and buy
assets where returns are higher. Japan's benchmark rate is 0.5 percent,
compared with 6 percent in Australia and 7.5 percent in New Zealand.
Coordinated
interest-rate reductions by central banks in the U.S., Europe and Asia
in the past two days failed to revive lending among banks. The London
interbank offered rate, or Libor, for three-month loans rose to 4.75
percent yesterday, the highest level since Dec. 28.
The dollar touched a
14-month high of $1.3444 per euro on Oct. 6 as the freeze in credit
markets and global stock losses boosted demand for U.S. Treasuries.
Banks' reluctance to lend to each other also caused a shortage of
dollars for funding, accelerating the currency's gain.
The euro headed for
a third weekly loss against the dollar and a second versus the yen on
speculation the credit crisis in Europe will deepen, prompting the
European Central Bank to cut interest rates. The bank two days ago
lowered its benchmark interest rate for the first time in five years.
The
currency has fallen 7.3 percent versus the yen this week, the most
since the euro's debut in 1999. ECB policy makers said yesterday they
expect the region's economic growth will remain weak for some time.
EUR/USD having established a session low on $1,3504, the rate has sharply grown in area $1,3640.
GBP/USD having reached a mark $1,6784, the pair has updated a 5-years low then it was corrected in area $1,6930.
USD/JPY the pair continues to test resistance in the field of Y98,50 after earlier the rate has quickly decreased below mark Y98.00.
Friday's
session sees an early close for US markets ahead of the Columbus Day
holiday on Monday, though the late European session isdominated by
central bank and finance minister appearances, given the G7 meetings in
Washington.
On Friday there will be data on employment for
September in Canada (11:00 GMT). At 12:30 GMT trade balanc of the USA
and Canada will be published. Besides this day it is necessary to pay
attention to the publication of Import Price Index of the USA at 12:30
GMT and the Bank of Canada Business Outlook Survey at 14:00 GMT.