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Hong Kong - The dollar slipped, erasing its monthly gain against major peers, as the yen climbed after the Bank of Japan (BoJ) refrained from expanding its record stimulus program and the yuan advanced on further steps to increase its convertibility.
Most European shares rose with US equity-index futures.
The Bloomberg Dollar Spot Index slipped for a second day, with the greenback lower against all major partners. The yen climbed on speculation that Japan’s government will use other policy tools to boost growth after the BoJ adjudged current levels of stimulus appropriate.
The yuan jumped in onshore and offshore trading as the central bank said it may trial a program in the Shanghai free-trade zone to allow domestic investors to directly buy overseas assets. West Texas Intermediate crude fell.
“It’s good they didn’t” add to easing, said Yoshinori Shigemi, a global market strategist in Tokyo at JPMorgan Asset Management. “Ultimately, I think the yen-dollar rate depends on the US economy. Then it’ll be a weaker yen, weaker euro, stronger dollar and stronger yuan.”
The yield on 10-year Japanese notes was little changed after jumping by as much as two basis points immediately after the BOJ decision, which comes against the backdrop of increased bets on the Federal Reserve raising interest rates by the end of the year.
The yen is little changed for the year, among the best performers versus the dollar in 2015 as other nation’s currencies have tumbled amid central bank efforts to boost growth.
Currencies
The Bloomberg Dollar Spot Index slipped 0.3% by 10:21, leaving it little changed for the week, and 0.1% lower in October. The euro climbed 0.2% to $1.0995. The Australian dollar added 0.5% to pare its weekly loss to 1.5%. Its New Zealand neighbor jumped 0.9% to be headed for a 5.6% monthly advance, the most since September 2013.
The yen added 0.3% to ¥120.73/$. It’s lost almost 10% of its value versus the greenback in the year since the BOJ increased stimulus on October 31, with most of that move occurring before the end of 2014. The yen has the smallest drop among 16 major peers to the US dollar. Only the Swiss franc has gained this year.
The yuan climbed 0.5% in onshore trading, the biggest advance since March. The offshore-traded currency climbed 0.5%. The yuan traded in Hong Kong earlier closed its gap with the Shanghai rate, compared with a 0.7% discount a week ago, after suspected intervention.
The People’s Bank of China said it will test yuan capital account convertibility in the Shanghai FTZ, which will expand its cross- border use, according to a statement on the PBOC website.
Stocks
The Stoxx Europe 600 Index climbed 0.1%, with more than two stocks rising for each that fell. The MSCI Asia Pacific index added 0.4%, heading for an 8.6% advance in the month, the most since May 2009. All 10 groups on the index have advanced this month, led by a measure of energy shares.
