The yen rose, heading for weekly gains against the euro and the
dollar, as a drop in U.S. retail sales prompted speculation investors
will sell higher-yielding assets and pay back low-cost loans in Japan's
currency.
The dollar was poised for a second weekly gain versus an
index of the currencies of six major trading partners as investors
sought the relative safety of U.S. assets. The yen climbed against the
Australian and New Zealand dollars today on bets a Group of 20 nations
summit will fail to reach a consensus on resolving the credit crisis,
sapping carry trades.
The yen advanced 1 percent to 96.77 per dollar
at 10:59 a.m. in New York, from 97.68 yesterday. Against the euro, the
yen climbed 1.7 percent to 122.73 from 124.78. The euro depreciated 0.8
percent to $1.2669 from $1.2769. The pound decreased 0.2 percent to
$1.4809.
Sales at U.S. retailers fell 2.8 percent in October, the
biggest drop since records began in 1992, the Commerce Department
reported today in Washington. The dollar briefly pared its loss against
yen as the Reuters/University of Michigan preliminary index of consumer
sentiment unexpectedly rose to 57.9 from 57.6 in October.
I wouldn't suggest the markets are trading on economics as much as on equity flows at this moment.''
The
Standard & Poor's 500 Index decreased 2.5 percent after rallying
6.9 percent yesterday. The Dow Jones Industrial Average dropped 2.8
percent following a gain of 6.7 percent.
The euro fell 0.4 percent
this week against the dollar, while the British pound slid 5.4 percent
as the European Central Bank and the Bank of England faced mounting
pressure to lower borrowing costs.
Gross domestic product in the
15 euro nations shrank 0.2 percent from the previous three months, when
it also contracted 0.2 percent, the European Union's Luxembourg-based
statistics office said today. The two quarters of contraction mark the
first recession since the single currency was introduced almost a
decade ago.
The Bank of England is prepared to cut rates from 3 percent, Governor Mervyn King said this week.
Leaders
of G-20 countries were gathering in Washington to debate proposals
ranging from curbing executive pay and restraining hedge funds to
raising capital requirements for banks after financial institutions
worldwide lost $958 billion on securities tied to U.S. mortgages.