The yen and the dollar fell after the World Bank raised its growth forecast for China, fueling gains in stocks and sapping demand for the currencies as a refuge from the economic slump. The World Bank said the Chinese economy will expand 7.2 percent this year, up from a previous forecast of 6.5 percent. The dollar also dropped as traders pared bets that the Federal Reserve will increase interest rates by year-end. The Swiss franc weakened after the nation's central bank said it will act "decisively" to curb the currency's gains.
The yen weakened to 133.67 per euro as of 8:54 a.m. in London, from 133.50 yesterday in New York. It was at 95.84 per dollar, from 95.75. The dollar traded at $1.3946 per euro, from $1.3942. The U.K. pound advanced against the dollar to trade 0.3 percent higher at $1.6454 as of 8:10 a.m. in London.
The World Bank joins Goldman Sachs Group Inc., Morgan Stanley and UBS AG in raising growth forecasts for China after a 4 trillion-yuan ($585 billion) stimulus package triggered record loans and surging investment in the world's biggest contributor to growth last year.
Traders cut bets the Fed will raise its target rate for overnight loans this year before a U.S. report that may show the Philadelphia region's manufacturing shrank for a ninth month. The odds of a rate increase dropped to 45 percent, from 64 percent odds a week ago, Fed fund futures trading showed.
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