The yen and the dollar rose, heading for record monthly gains against
the euro, as signs of a global recession prompted investors to sell
higher-yielding currencies.
Japan's currency also advanced after the Bank of Japan lowered interest
rates by 20 basis points to 0.3 percent, compared with forecasts for a
cut to 0.25 percent. The euro fell as the European Union statistics
office in Luxembourg today said inflation in the 15 nations that share
the currency slowed to the lowest since January, giving the European
Central Bank more room to lower rates.
The yen climbed to 124.50 per euro as of 7:04 a.m. in New York from
127.31 yesterday. Against the dollar, it was at 97.58 from 98.61. The
Japanese currency may trade at 95 to the dollar in the next week, Cole
said. The dollar rose 1.3 percent versus the euro to $1.2743.
The yen has risen 17 percent against the euro in October, heading for
it biggest monthly gain since the European currency's introduction in
1999. The dollar has gained 10.6 percent versus the euro in the month.
The greenback is down 9 percent against the yen, the biggest decline
since 1998, when hedge fund Long-Term Capital Management LP collapsed.
The pound weakened to $1.6203 from $1.6451. Against the Australian
dollar, the yen advanced to 64.24 from 67.27. It also rose to 56.27
versus the New Zealand dollar from 58.35.
U.K. consumer confidence in October fell toward the lowest since at
least 1974, London-based researcher GfK NOP Ltd. said today. The U.S.
economy shrank in the third quarter by the most since 2001, data showed
yesterday.
Policy makers meet Nov. 6, when they will probably cut the region's
main refinancing rate by half a percentage point to 3.25 percent,
according to a Bloomberg survey of 26 economists.
The euro stayed lower as inflation in the countries sharing the
currency eased to 3.2 percent in October from 3.6 percent the month
before, matching the median of 27 economists in a Bloomberg News survey
The yen remained higher after the BOJ lowered its benchmark rate to 0.3 percent from 0.5 percent,
``The reluctance of the BoJ to join the more aggressive moves of the
Fed has hit risk appetite,'' analysts led by Hans-Guenter Redeker,
London-based global head of currency strategy at BNP Paribas SA, wrote
in a client note. The move suggests the Japanese central bank ``is
nowhere near ready to introduce quantitative easing steps.''
Governor Masaaki Shirakawa told a press briefing that the Japanese
economy had clearly worsened this month and that three dissenters had
wanted a quarter-point cut. One favored no reduction and four voted for
the move.
``We remain concerned about British pound given the deteriorating
economic outlook in the U.K., and recent signals from the BoE suggest
scope for more aggressive easing than previously,'' wrote New
York-based Sophia Drossos, a strategist at Morgan Stanley in a research
note yesterday.
EUR/USD having tested a mark $1,2700, the pair has raised in area $1,2740.