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Euro rises against yen on ECB speculation

Edinburgh - The euro rose for an eighth day against the yen amid speculation the European Central Bank (ECB) won’t be as aggressive as the Bank of Japan in boosting monetary stimulus.

It also climbed against 14 of its 16 major peers after a report confirmed the region’s manufacturing industry grew in January, which may suggest the economy is still resilient enough to mitigate the need for an aggressive expansion of the ECB’s quantitative-easing program.

Europe’s shared currency jumped to a one-month high against the yen Friday when Japanese policy makers surprised traders by announcing a negative interest-rate system.

While the eurozone already has a negative deposit rate, markets are wary of expecting policy makers in Frankfurt to pull further radical easing measures from up their sleeves, particularly after a boost to QE in December was largely judged to have under- delivered. More monetary easing can help weaken a currency and stoke growth and inflation by expanding the money supply.

“The data’s not so bad that you’re forced to expect the ECB to be super expansionary,” said Esther Reichelt, a Frankfurt- based currency strategist at Commerzbank AG.

“After the disappointment in December, markets are very cautious about what to expect from the ECB, even if they are sounding dovish. The market is reluctant to price in too much because it hurt them in December.”

Winning streak

The euro gained 0.2% to ¥131.48 as of 11:45, having touched ¥132.32 on January 29. It’s the 19-nation currency’s longest winning streak versus its Japanese counterpart since December 2013. It climbed 0.1% to $1.0846, eroding its 0.3% drop in January. Japan’s currency was little changed at ¥121.20 per dollar.

Markit Economics’s gauge of eurozone manufacturing output gave a reading of 52.3 for January. While that’s down from December’s release, it’s still above the 50 threshold that signals expansion.

ECB President Mario Draghi is scheduled to speak to the European Parliament in Strasbourg later on Monday.

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