Japan's yen reversed gains from near a three-year high versus the euro as futures on the Standard & Poor's 500 Index advanced following its biggest plunge since the 1987 stock market crash. The dollar remained higher versus the yen after the Labor Department reported a drop in initial jobless claims
The yen dropped 0.8 percent to 135.99 per euro at 9:19 a.m. in New York, from 134.93 yesterday. It touched 133.38, near the strongest since June 2005. Japan's currency declined 1 percent to 100.93 per dollar from 99.96. The dollar traded at $1.3477 per euro, compared with $1.3499. It reached $1.3259 on Oct. 10, the strongest since March 2007.
The yen dropped 8.3 percent to 10.17 against the South African rand and 4.8 percent to 69.31 versus the Australian dollar on speculation a rebound in stocks will revive carry trades, in which investors get funds in a country with low borrowing costs and buy assets where returns are higher. Japan's 0.5 percent benchmark rate compares with 3.75 percent in Europe, 6 percent in Australia and 7.5 percent in New Zealand.
Japan's currency fell against the euro as S&P 500 futures expiring in December added 2.4 percent. The S&P 500 lost 9 percent yesterday.
The yen has gained 5.4 percent against the dollar and 9.5 percent against the euro this quarter as global credit market losses led investors to unwind carry trades and buy Japan's currency to repay loans.
The dollar rose to the highest level versus the euro since March 2007 on Oct. 10, partly as banks' reluctance to lend to each other spurred a surge in demand for U.S. currency funding in global money markets.
Initial jobless claims declined to 461,000 in the week that ended Oct. 11, from 477,000 the prior week, the Labor Department said today in Washington.
International demand for long-term U.S. financial assets in August grew as investors sought Treasuries and shunned debt issued by Fannie Mae, Freddie Mac and other agencies.
Total net purchases of long-term equities, notes and bonds rose to a net $14 billion from $8.6 billion the previous month, the Treasury Department said today in Washington. Including short-term securities such as Treasury bills and non-market trades such as stock swaps, foreigners sold a net $400 million, compared with net sales of $33.6 billion a month earlier.
The Fed reported that industrial production in the U.S. fell 2.8 percent in September, the most in almost 34 years, as hurricanes and an aircraft strike combined with the credit crunch to weaken manufacturing.
Canada's dollar rose for the first time in three days as commodity-linked currencies strengthened globally. The Canadian dollar rose as much as 1 percent to C$1.1796 per U.S. dollar from C$1.1915 yesterday. The currency last traded at C$1.1867 at 8:53 a.m. in Toronto.
Brazil's real erased losses as U.S. stock-index futures advanced, easing concern that investors will dump emerging-market assets. The real climbed 1 percent to 2.2037 per U.S. dollar at 8:58 a.m. New York time, from 2.2265 yesterday, when the currency slumped 5.9 percent.
India's rupee fell to a six-year low on concern tumbling equities worldwide will spur investors to take more money out of the nation's financial market. The rupee dropped 0.7 percent to 48.82 a dollar as of the 5 p.m. close in Mumbai, Bloomberg data show.
Russia's ruble fell to the lowest level in 20 months versus the dollar today as oil slumped, raising the prospect of the country's first budget deficit in a decade. The ruble declined as much as 0.6 percent to 26.4094 per dollar, the weakest since Feb. 13, 2007. It was little changed at 26.2599 as of 3:52 p.m. in Moscow, from 26.2525 yesterday.