The yen fell against the dollar and the euro as a rally in Asian
stocks encouraged investors to step up purchases of higher-yielding
assets financed with the Japanese currency.
The yen also weakened versus the Australian dollar, which last month
slumped to a record low as frozen credit markets damped demand for
so-called carry trades. Regional shares climbed for a fifth day after
South Korea pledged extra spending to help avert a recession and India
lowered interest rates for the second time in two weeks. The prospect
of rate cuts in Australia and Europe this week also helped drive
equities higher.
Economists forecast the Reserve Bank of Australia will cut its
benchmark interest rate by a half-percentage point to 5.5 percent
tomorrow, after policy makers in the U.S., Japan and China announced
reductions last week.
The European Central Bank and the Bank of England will reduce their
benchmarks by a half-percentage point to 3.25 percent and 4 percent,
respectively, at policy meetings on Nov. 6, according to separate of
economists.
The dollar fell for the first time in three days against the euro
on speculation that growth in the world's largest economy will slow
further, supporting the case for the Federal Reserve to cut interest
rates. A report today is forecast to show U.S. manufacturing last month
dropped to the lowest level since October 2001.
The Institute for Supply Management's factory index, scheduled for
release at 10 a.m. in New York, declined to 41.5 in October from 43.5
the previous month, according to economists surveyed. A reading of less
than 50 signals contraction. A Labor Department report on Nov. 7 will
probably show payrolls fell for a 10th straight month in October, a
separate survey showed.
EUR/USD having shown high in the field of $1,2890, the pair has decreased below a mark $1,2800.