CURRENCIES: Dollar Logs 2nd Straight Weekly Loss Against Yen
13 February 2016 - 8:32AM
Dow Jones News
By Anora Mahmudova, MarketWatch , Hiroyuki Kachi
Greenback declines 3% against the Japanese currency
The U.S. dollar firmed against the euro and yen Friday after
better-than-expected retail sales suggested consumer spending--the
biggest driver of the economy--was stronger than expected in
January.
However, the greenback's Friday gains didn't prevent it from
posting its second straight weekly decline against major rivals
against the backdrop of panicky global stock markets, and doubt
that the Federal Reserve will raise rates in 2016.
The ICE Dollar Index , a measure of the dollar against a basket
of major currencies, was up 0.4% at 95.97, but was down 1% over the
week.
The dollar rose to a session-high against the yen
(http://www.marketwatch.com/story/retail-sales-increase-02-in-january-2016-02-12)after
official data showed retail sales rose 0.2% in both January and
December after an upward revision to December's initially-weak
reading. Though it has trimmed its rise after a
weaker-than-expected read on February consumer sentiment
(http://www.marketwatch.com/story/consumer-sentiment-weakens-in-february-university-of-michigan-says-2016-02-12).
"Retail sales were better than expected, but still not great.
The number is in line with the idea that the economy is still
growing at a relatively healthy clip and supports the Federal
Reserve's notion of gradual normalization," said Omer Esiner, chief
market analyst at Commonwealth Foreign Exchange.
The greenback rose to Yen113.26 in recent trade, compared with
Yen112.29 late Thursday in New York. The euro traded at $1.1255,
compared with $1.1316 Thursday.
Despite Friday's uptick, the greenback logged weekly declines
against both rivals, depreciating 3% against the yen and 1% against
the euro.
Read: The Dow's downtrend is now official
(http://www.marketwatch.com/story/the-dows-downtrend-is-now-official-2016-02-11)
Since the start of 2016, the dollar has weakened against both
the euro and yen as market turmoil has led global investors to the
perceived havens like the Japanese currency and U.S. Treasurys.
Janet Yellen's testimony on Capitol Hill on Wednesday and Thursday
also cast doubt on the likelihood that the central bank will raise
rates when they next meet in March or during the rest of the year.
In testimony, Yellen said financial conditions "have become less
supportive to growth."
The euro has also benefited because of the eurozone's growing
current-account surplus, analysts have said. A growing
account-surplus has made the euro an attractive funding currency
for so-called carry trades. The carry trade is a speculative
strategy where investors borrow in one currency with relatively low
interest rates then trade for a currency with higher rates, then
pocket the spread.
The dollar continued to weaken even after the Bank of Japan
decided to impose negative rates for the first time, a decision
analysts said would typically cause the currency to weaken.
Instead, the yen--also viewed as a popular funding currency for
carry trades--has strengthened as investors moved into haven
assets.
Read:Here are five signs we might already be in a bear market
(http://www.marketwatch.com/story/here-are-5-signs-we-might-already-be-in-a-bear-market-2016-02-11)
Worries about a strong yen drove the Nikkei Stock Average
(http://www.marketwatch.com/story/japan-stocks-plunge-to-lowest-point-in-more-than-a-year-2016-02-11)
to levels not seen since October 2014. The benchmark index closed
down 4.8%, falling for the third straight session.
Comments from Japanese Finance Minister Taro Aso on Friday also
helped weigh on the yen, as the minister warned investors
(http://www.wsj.com/articles/japans-aso-warns-investors-over-yens-surge-1455239376)
about the surging yen, saying the government will "act
appropriately" in the currency markets.
(END) Dow Jones Newswires
February 12, 2016 16:17 ET (21:17 GMT)
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