Azernews.Az

By Bloomberg

The yen declined from the strongest level in seven weeks versus the dollar as Chinese stocks rallied, damping demand for haven assets.

Japan’s currency weakened against all of its 16 major counterparts as Prime Minister Shinzo Abe said the correction of the strong yen had begun to restore people’s confidence. Australia’s dollar jumped the most in three weeks after a government report showed employers unexpectedly added jobs in June. A gauge of currency volatility fell from the highest since April.

“The dollar-yen market recently has a strong correlation with Chinese stocks,” said Yuji Saito, executive director of foreign exchange at Credit Agricole SA in Tokyo. “With China’s stocks now entering positive territory, the yen is turning downward.”

The yen dropped 0.6 percent to 121.40 per dollar as of 9:21 a.m. London time after appreciating to 120.41 on Wednesday, the strongest level since May 19. Japan’s currency weakened 0.3 percent to 134.09 per euro, the first decline in four days.

The Shanghai Composite Index rose 5.8 percent, recovering from declines of as much as 3.8 percent. The index had tumbled as much as 35 percent from its June peak to Thursday’s low.

Australia’s dollar rose for the first time in seven days as a government report showed employers added 7,300 workers last month, compared with a median forecast from economists for jobs growth to have stagnated.

Aussie Advances

The Aussie strengthened 0.5 percent to 74.63 U.S. cents, set for the biggest gain since Jun 18. It touched 73.72 cents on Wednesday, the lowest since May 2009.

The Deutsche Bank Currency Volatility Index of implied volatility for nine major currency pairs declined to 10.9 percent. It touched 11 percent on Wednesday, the highest since April 2.

Greece is working on an economic package to convince European leaders that it can keep the euro. The leaders of all 28 European Union countries will meet in Brussels on Sunday to decide their response.

“In the absence of any fresh news out of Europe, Greece has moved to the sidelines and is playing second fiddle to China,” said Prashant Newnaha, a rates strategist at TD Securities Inc. in Singapore. “Some of the risk-off positions are likely being closed out, driving the Aussie up and the yen down.”