Yen set for worst month since 2009

Tokyo - The yen headed for its worst month in almost seven years as speculation Donald Trump will pursue reflationary policies spurred speculation that US monetary tightening will accelerate.

Japan’s currency has declined more than 6% in November, with futures signaling three quarter-point interest-rate increases from the Federal Reserve by the end of next year.

The three-week rout since November 4 was the yen’s biggest since 1995, as short-term US Treasury yields climbed to the highest since April 2010. Monday’s biggest one-day rebound in two months for the yen barely made a dent in the recent rout.

Hedge funds and other large speculators have trimmed net bullish yen positions to the least since January, according to Commodity Futures Exchange Commission data.

The yen was little changed at ¥111.94/$ as of 08:05. It touched an eight-month low of ¥113.90 on Friday, and has weakened against every developed-market peer this month. It surged 1.1% on Monday, the most since September, as an indicator called the relative strength index signaled the yen had dropped too fast.

Crude oil has weakened on concern producers will fail to curb supply and retail sales on Black Friday in the US were seen as limp, adding to concern that global economic growth may remain anemic.

“Amid caution that the rise in the dollar and stocks may have come too far, uncertainty about an OPEC production cut and lackluster Black Friday sales in the US and other negative factors have led to a pause in the Trump market,” said Yuji Kameoka, chief FX analyst at Daiwa Securities in Tokyo.

The two-year Treasury yield was little changed at 1.10%, after touching 1.17% at the end of last week. The 10-year yield was at 2.32% after reaching 2.41% on Wednesday.

The Bloomberg Dollar Spot Index, which measures the greenback against 10 major peers, was little changed following a two-day, 0.6% decline. It has rallied 3.6% in November, the most since May.

“The dollar pullback appears to be technical in nature as there was no fundamental trigger for this move,” said Elias Haddad, a senior currency strategist at Commonwealth Bank of Australia in Sydney.

“The dollar will edge higher later in the week on favourable US employment conditions and political uncertainty ahead of Sunday’s Italian referendum on constitutional reform.”

Elsewhere among 16 major currencies:

The pound declined 0.2% to $1.2398, paring its monthly gain (the only advance among major peers) to 1.3% Norway’s krone weakened 0.3%, the biggest daily slide, as oil fell The Mexican peso was little changed, holding its 8.8% tumble as the worst performer in November The euro was down 0.1% extending its worst month this year

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