Azernews.Az

The yen came within 0.6 percent of a five-year low amid speculation Japanese Prime Minister Shinzo Abe will appoint tomorrow an ally to head the ministry in charge of reforming the nation's pension fund.

Japan's currency slid versus all of its 16 most-traded counterparts as Kyodo News reported Abe may appoint Yasuhisa Shiozaki, deputy policy chief of the ruling Liberal Democratic Party, to become health minister. The dollar rose to an seven- month high against its major peers on prospects an improving U.S. economy will support the case for the Federal Reserve to raise interest rates. The Australian dollar held losses after the Reserve Bank kept borrowing-costs at a record low.

"Media reports that Prime Minister Abe is considering appointing Shiozaki as the health, labor and welfare minister are fueling expectations for GPIF reform, helping lift Japanese stocks and spurring yen selling," said Yuji Saito, a Tokyo- based director of foreign exchange at Credit Agricole SA, referring to Japan's Government Pension Investment Fund. "Shiozaki has been actively putting forward suggestions on GPIF reform."

The yen lost 0.4 percent to 104.80 per dollar as of 2:11 p.m. in Tokyo after touching 104.87, the weakest since Jan. 16. The currency fell to 105.44 on Jan. 2, a level not seen since October 2008. It dropped 0.4 percent to 137.52 per euro. The dollar added 0.1 percent to $1.3122 per euro after gaining to $1.3115, the strongest since Sept. 6.

The Aussie dollar was down 0.4 percent at 92.99 U.S. cents, after falling as much as 0.5 percent earlier today.

Shiozaki is considered likely to be appointed as health minister or economy minister, Mainichi newspaper reported without citing anyone.

Pension Reform

Japan's health ministry oversees the 127.3 trillion yen ($1.2 trillion) GPIF, the world's largest pool of retirement savings. It will probably announce its new asset allocations this fall, according to investment committee chairman Yasuhiro Yonezawa. Analysts surveyed by Bloomberg in May predict GPIF will raise its holdings of Japanese equities and trim its domestic bond assets.

The yen has weakened 1.2 percent in the past month, according to Bloomberg Correlation-Weighted Indexes that track 10 developed-nation currencies. The dollar has risen 1.1 percent, while the euro has declined 1.4 percent.

A gauge of the dollar against 10 leading global currencies rose as economists surveyed by Bloomberg News predict the Institute for Supply Management will say today its gauge of U.S. manufacturing held last month near the highest since April 2011.

A Labor Department report on Sept. 5 will show payrolls rose by more than 200,000 in August for a seventh-straight month, a separate survey showed.

'Dollar Appreciation'

"The risks favor additional dollar appreciation," said Todd Elmer, a strategist in Singapore at Citigroup Inc., the world's largest currency trader. "There's going to be greater sensitivity to the pickup in data flow given that there's the perception that the Fed is changing its stance."

There's a 73 percent chance U.S. central bank officials will raise the target for overnight bank lending by September 2015, futures data compiled by Bloomberg showed yesterday.

The Bloomberg Dollar Spot Index, which tracks the U.S. currency versus 10 major counterparts, rose 0.2 percent to 1,032.41 after climbing to 1,032.98, the highest since Jan. 31.

The euro slid to the lowest in almost a year before data on regional retail sales and services that may add to the case for additional policy easing from the European Central Bank, which meets this week.

Retail Drop

The European Union's statistics office will probably say tomorrow euro-area retail sales fell in July for the first time in four months, according to economists surveyed by Bloomberg. A final reading due tomorrow of a gauge of the region's services sector by Markit Economics will confirm a decline last month, a separate survey showed.

The ECB will hold a policy meeting on Sept. 4. It may embark on quantitative easing this year or next, according to 44 percent of respondents in a Bloomberg survey last month.

"The European economy is looking really quite soft," said Emma Lawson, a senior currency strategist at National Australia Bank Ltd. in Sydney. "The outlook for the U.S. has improved somewhat, which allows the U.S. dollar to strengthen a little bit, so that just puts a little bit more downward pressure on the euro."