By Yoshiaki Nohara and Ron Harui
Sept. 7 (Bloomberg) -- The euro climbed against the dollar for a second day before a private report forecast to show European investor confidence rose to the highest level since July 2008, signaling the region’s recession is easing.
The euro also gained for a third day versus the yen on expectations a German report will show factory orders expanded in July for a fifth month. Australia’s dollar advanced to a one- year high against the greenback after the Group of 20 nations pledged to maintain economic stimulus, driving up Asian stocks. Treasury futures were little changed ahead of a U.S. holiday.
“The positive economic outlook is causing more risk taking, supporting the euro and commodity currencies, especially the Australian dollar,” said Takashi Kudo, director of foreign- exchange sales in Tokyo at NTT SmartTrade Inc., a unit of Nippon Telegraph & Telephone Corp. “Additional positive economic data would further enhance the trend. The euro may climb to near $1.44 today.”
The euro strengthened to $1.4334 as of 1:49 p.m. in Tokyo from $1.4297 in New York on Sept. 4. Europe’s currency rose to 133.53 yen from 132.98 yen, and climbed to 87.50 British pence from 87.21 pence. The dollar traded at 93.16 yen from 93.01 yen.
Australia’s dollar climbed to 85.14 U.S. cents from 85.07 cents on Sept. 4. It earlier touched 85.38 U.S. cents, the strongest level since September 2008. Australia’s currency advanced to 79.33 yen from 79.11 yen.
The yen weakened versus 14 of its 16 major counterparts as the Nikkei 225 Stock Average climbed 1.2 percent and the MSCI Asia Pacific Index of regional shares rose 1 percent.
Ten-year U.S. bond futures maturing in December 2009 were little changed at 116 31/32 as the Treasury prepared to sell $70 billion in three-, 10- and 30-year debt this week, according to data compiled by Bloomberg. U.S. financial markets are closed today for the Labor Day holiday.
Europe Sentiment
The euro gained for the first time in four days versus the pound as a Bloomberg News survey of economists showed an index measuring euro-region sentiment will rise to minus 13.7 this month from minus 17 in August. The Limburg, Germany-based Sentix research institute is set to report the index today.
Germany’s Economy Ministry in Berlin will say today factory orders gained 2 percent in July after rising 4.5 percent in June, according to a separate Bloomberg survey of economists.
G-20 officials including U.K. Chancellor of the Exchequer Alistair Darling and German Finance Minister Peer Steinbrueck said in London last week that it was premature to quit emergency measures to fight the global recession, signaling central banks will hold down interest rates.
‘Improved Outlook’
“With an improved outlook for growth and no early unwinding of stimulative policies, this should support investor risk appetite and hence global growth-sensitive currencies such as the Australian dollar,” John Kyriakopoulos, head of currency strategy in Sydney at National Australia Bank Ltd., wrote in a research note today.
The yen fell for a fourth day against Australia’s dollar as signs the global economy may be headed for a recovery gave investors more confidence to seek higher returns overseas.
U.S. companies cut payrolls by 216,000 workers in August, fewer than economists had forecast and following a 276,000 reduction in July, Labor Department data showed on Sept. 4. The jobless rate rose to 9.7 percent from 9.4 percent.
Labor Day Effect
“There’s a sense the worst of the worldwide recession is over, with the equity market rebounding,” said Akifumi Uchida, deputy general manager of the marketing unit at Sumitomo Trust & Banking Corp. in Tokyo. “From a risk-appetite perspective, the yen is likely to be sold.”
The benchmark interest rate is 0.1 percent in Japan, compared with 3 percent in Australia, making the South Pacific nation’s assets attractive to investors.
Losses in the yen may be limited today due to trading patterns during the Labor Day holiday in the U.S., said Tohru Sasaki, chief currency strategist in Tokyo at JPMorgan Chase & Co., citing charts prepared by the bank.
“While we are tempted to say that the market is likely to be range-bound because today is a U.S. holiday, the yen actually has a strong tendency to appreciate on the U.S. Labor Day holiday,” Sasaki wrote in an e-mail to Bloomberg News today.
The yen has appreciated eight out of nine times since 2000 on Labor Day, Sasaki said.
To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.
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