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Tokyo - The yen fell for the first time in three days against the dollar as Japanese stocks rallied and investors turned their attention to US jobs data due on Friday.
Japan’s currency dropped against all except one of its 16 major peers after surging the most in a week on Tuesday when a global slide in equities spurred demand for safer assets and damped speculation the Federal Reserve will raise interest rates this month.
A measure of exchange-rate volatility climbed to a five-month high.
“Declines in stocks have eased a bit since reaching the low," said Nagayuki Yamagishi, a senior analyst in Tokyo at Money Square Japan Inc., a currency broker. "The recent dollar- yen selling is being also corrected."
The yen fell 0.7% to ¥120.15/$ as of 06:12 after climbing 1.6% on Tuesday, the biggest advance since August 24. Japan’s currency dropped 0.3% to ¥135.45/€.
Japan’s Nikkei 225 Stock Average rose as much as 1.7% after tumbling 5.1% in the previous two days. The JPMorgan G7 Volatility Index, which measures expectations for price swings in Group-of-Seven currencies, climbed to 10.83%, the highest since April 2. It was as low as 8.61% in February.
US employers added 218 000 workers in August, more than 200 000 for a fourth month, while the unemployment rate fell to a seven-year low of 5.2%, according to economists surveyed by Bloomberg before the Labour Department releases the data September 4.
“The US dollar should hold up given payrolls on Friday,” said Imre Speizer, a senior market strategist at Westpac Banking in Auckland. “There’s no reason to think that we will get a bad result and that should keep pricing for a Fed hike in place.”
Dollar’s gain
The dollar has appreciated 8.4% this year, the performer after the Swiss franc of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes, amid speculation the Fed is moving toward raising rates for the first time since 2006. The central bank next meets September 16 to September 17.
Australia’s dollar fell below 70 US cents for the first time since April 2009 after a report showed the economy grew last quarter at half the pace analysts forecast.
The Aussie rose 0.3% to 70.38c after dropping as much as 0.5% to 69.82c. New Zealand’s dollar gained 0.4% to 63.63c.
“Market sentiment remains weighed down by uncertainty over the state of the Chinese economy and policy responses,” said Masafumi Yamamoto, a senior strategist at Monex in Tokyo.
“Investors don’t know where to park their money, so moves to scale back positions they’ve built so far have come to the fore amid a lack of clear direction.”
