By Yasuhiko Seki and Matthew Brown
July 29 (Bloomberg) -- The yen and the dollar rose as stocks declined and economists said a report will show orders for U.S. durable goods fell last month, curbing demand for higher-yielding assets.
The Japanese currency also advanced amid speculation domestic investors are repatriating earnings. The Australian dollar fell from near its strongest level this year against the U.S. currency. South Korea’s won ended a two-day advance as Asian stocks declined, with the Shanghai Composite Index tumbling the most in eight months.
“With equities softer, risk currencies are coming off and the dollar and the yen are benefiting,” said Daragh Maher, deputy head of global foreign-exchange strategy in London at Calyon, the investment-banking unit of Credit Agricole SA. “Anything that suggests expectations for growth in China are lower today than yesterday is going to hit the risk currencies.”
The yen strengthened to 133.67 per euro at 8:45 a.m. in London, from 133.95 yen yesterday in New York. It was at 94.33 per dollar from 94.55, extending its advance this month to 1.8 percent. The euro bought $1.4171, from $1.4167 yesterday. The 16-nation currency traded in July in a range of $1.3833 to yesterday’s high of $1.4304, the strongest level since June 3.
Australia’s currency fell to 82.04 U.S. cents, from 82.68 cents in New York yesterday, when it rose to 83.38 cents, the most since Sept. 29.
‘Painfully Slow’
The yen rose against all 16 most-traded currencies tracked by Bloomberg. Orders for durable goods in the U.S. fell 0.6 percent last month, the first retreat in three months, according to the median of 73 economists’ forecasts in a Bloomberg News survey. The Commerce Department releases the data at 8:30 a.m. in Washington today.
China’s Shanghai Stock Exchange Composite Index dropped 5 percent, the most since Nov. 18, as Jiangxi Copper Co. said first-half profit fell and China Cosco Holdings Co., the world’s largest operator of dry-bulk ships, forecast a loss. Retail sales in Japan slid 3.0 percent from a year earlier following a 2.8 percent drop in May, the Trade Ministry said today in Tokyo.
Federal Reserve Bank of San Francisco President Janet Yellen said the U.S. economy’s recovery is likely to be “painfully slow” as consumers spend less and save more. She also said the U.S. is showing the “first solid signs” of emerging from recession.
“A gradual recovery means that things won’t feel very good for some time to come,” Yellen said in a speech in Coeur d’Alene, Idaho.
Eurobond Redemptions
Demand for the yen also rose amid speculation Japanese investors will bring back funds from redemption payments on 18 billion euros ($25.5 billion) in European government bonds maturing tomorrow, according to RBC Capital Markets.
“Talk of sizeable Eurobond redemptions are weighing on the euro-yen,” said Sue Trinh, a senior currency strategist at RBC Capital Markets in Sydney.
The Japanese currency extended its advance against the 16- nation currency after a car bomb explosion in the Spanish city of Burgos. The blast hurt 36 people, according to a government official.
“This news strengthened risk-aversion briefly and added to the buying of the yen,” said Yuji Saito, head of the foreign- exchange group in Tokyo at Societe Generale, France’s third- largest bank.
The won fell 0.3 percent to 1,239.95 against the dollar as the MSCI Asia Pacific Index of shares snapped its longest winning streak in more than five years, falling 0.9 percent, after the U.S. Conference Board yesterday reported the consumer confidence index dropped for a second month in July.
The Conference Board’s confidence index fell to 46.6, following a reading of 49.3 in June, the New York-based research group said.
“It is negative for Asian exports and a surprise to the market,” said Dariusz Kowalczyk, chief investment strategist at SJS Markets Ltd. in Hong Kong.
To contact the reporters on this story: Matthew Brown in London at mbrown42@bloomberg.net; Yasuhiko Seki in Tokyo at yseki5@bloomberg.net
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