The yen and the dollar weakened against the euro before a U.S. report today that economists said will show the contraction in industrial production slowed, damping demand for safer assets. The yen and the dollar also weakened after Intel Corp.'s revenue forecast beat estimates yesterday and Goldman Sachs Group Inc. reported higher-than-expected earnings, damping demand for safer assets.
Asian currencies strengthened, as regional stocks gained and foreign- exchange and equity-market volatility declined, spurring investors to buy higher-yielding assets. However, the yen declined against 13 of the 16 major currencies after the Bank of Japan lowered its forecasts for the economy, reducing the appeal of the currency. Bank of Japan forecast the economy will shrink 3.4 percent in the year ending March 2010, more than the 3.1 percent predicted in April. That would outstrip last fiscal year's 3.3 percent contraction as the worst in the postwar era. GDP will increase 1 percent in the following fiscal year, less than the 1.2 percent predicted three months ago.
The yen declined to 131.37 per euro as of 7:50 a.m. in London from 130.62 yesterday in New York, after earlier dropping to 131.40, the lowest since July 8. The dollar weakened to $1.4060 per euro from $1.3967. The yen was at 93.42 versus the dollar from 93.50.
The pound rose against the dollar, climbing 0.3 percent $1.6355 as of 6:59 a.m. in London. The British currency was little changed versus the euro, trading at 85.60 pence, from 85.62 pence yesterday.
