The yen fell for a second day against the euro as stocks rose amid speculation Goldman Sachs Group Inc. will report stronger earnings today, spurring investors to increase holdings of higher-yielding assets.
The yen declined against all of the 16 major currencies after New Zealand’s Reserve Bank Governor Alan Bollard said “early signs of a global recovery have emerged” and an Australian report showed business sentiment turned positive. South Korea’s won climbed the most in two months against the greenback after a rally in U.S. stocks bolstered demand for emerging-market investments. The pound advanced against the dollar after a report showed the U.K. housing market improved.
“Today it’s going to be all about Goldman’s earnings,” said Jeremy Stretch, a senior strategist at Rabobank International in London. “The market is expecting some pretty bumper numbers", Bloomberg reports.
In addition to Goldman Sachs, Intel Corp and Johnson & Johnson release quarterly results on Tuesday.
"The market has already priced in positive numbers from Goldman Sachs and further buying of the dollar and cross/yen will be unlikely even after the results," said Yuji Saito, head of FX sales department at Societe Generale.
The U.S. June Producer Price Index (PPI) and retail sales data for the same month are also due today. The PPI will likely show a 0.9 percent rise compared with a 0.2 percent climb in May, and retail sales are expected to gain 0.4 percent after a 0.5 percent rise in May.
Dealers said there were sell orders for the dollar at the upper end of the 93 yen range from Japanese exporters, which capped the dollar's gains against the yen.
The euro gained 0.4 percent to 130.38 yen, and it was steady at $1.3978.
The Australian dollar climbed 0.5 percent to 73.18 yen, while the New Zealand dollar was up 0.2 percent at 58.97 yen, Reuters reports.
Expectations for positive second-quarter results from Goldman Sachs have been growing since Monday when influential financial analyst Meredith Whitney upgraded the bank's ratings from Neutral to Buy and predicted better-than-generally-expected earnings figures.
Short-term speculators responded by buying currencies that are considered riskier but pay higher interest than the yen, dealers said. They were betting that the better outlook for the U.S. financial sector should boost demand for risky investments, they said.
Short-term speculators "used optimism over Goldman as an excuse to buy back" the euro, the dollar and other higher-yielding currencies, said Keiichi Iguchi, a dealer at Resona Bank.
Gains in Japan's benchmark Nikkei 225 Stock Average index also added to risk appetite among short-term players and hedge funds, dealers said. The index closed 2.3% higher at 9261.81. The share markets in Hong Kong, Taiwan and Australia were also up.
Market participants will also closely monitor U.S. June retail sales data slated for release later in the global day to gauge the state of consumer demand. Economists polled by Dow Jones Newswires expect overall retail sales rose 0.5% on month, the same rate of growth as in May, Wall Sreet Journal reports.