“The yen weakened for a second day against the dollar before the Federal Reserve starts a two-day meeting today that may provide more information about when the central bank will start to reduce bond purchases.
Japan’s currency declined versus all except one of its 16 major counterparts after the central bank estimated the current-account balance increased to a record amid unprecedented monetary stimulus. The euro climbed to a four-month high against the dollar as German economic sentiment improved more than economists forecast. Australia’s dollar weakened for a third day after the Reserve Bank indicated the currency may fall further.
“We’re looking for the dollar to resume its uptrend versus the yen,” said Ian Stannard, head of European foreign-exchange strategy at Morgan Stanley in London. “The market can take advantage of any suggestions by the Fed that they are close to reducing bond purchases. The yen should remain under pressure across the board.”
The yen declined 0.9 percent to 95.33 per dollar at 7:07 a.m. in New York after depreciating 0.2 percent yesterday. Japan’s currency weakened 0.9 percent to 127.48 per euro. The euro gained 0.1 percent to $1.3374 after rising to $1.3399, the highest level since Feb. 20.
The JPMorgan Global FX Volatility Index increased to 10.35 percent from 10.25 percent yesterday after climbing to a one-year high of 11.43 percent on June 13. The average in the past 12 months is 8.65 percent.