Yen Faces Weekly Gain

The yen headed for weekly gains against the euro and the dollar as a record drop in U.S. retail sales prompted speculation investors will sell higher-yielding assets and pay back low-cost loans in Japan's currency.

The greenback was poised for a second weekly advance versus an index of the currencies of six major U.S. trading partners as investors sought the safety of dollar-denominated assets. The yen climbed against the Australian and New Zealand dollars this week on bets the Group of 20 nations summit will fail to reach a consensus on resolving the credit crisis, sapping carry trades.

The yen advanced 0.3 percent to 97.43 per dollar at 2:57 p.m. in New York, from 97.68 yesterday. Against the euro, the yen climbed 0.2 percent to 124.54 from 124.78. The euro was little changed at $1.2766, compared with $1.2769. The pound traded at $1.4906, compared with $1.4841.

The ICE's Dollar Index, which tracks the greenback against the euro, the yen, the pound, the Canadian dollar, the Swiss franc and the Swedish krona, increased 0.9 percent this week and reached 88.15 yesterday, the highest level since April 2006.

The yen rose 0.8 percent versus the dollar this week, its biggest gain since Oct. 24, and advanced 0.4 percent against the euro, 2.4 percent versus the Aussie and 5.7 percent versus New Zealand's dollar. The euro gained 0.4 percent versus the dollar.

Japan's currency advanced 0.9 percent to 64.48 against the Australian dollar and 1.9 percent to 54.77 versus the New Zealand dollar today on speculation investors will unwind trades in which they get funds in countries with low borrowing costs and buy assets where returns are higher. Japan's 0.3 percent target lending rate compares with 1 percent in the U.S., 5.25 percent in Australia and 6.5 percent in New Zealand.

The pound slid 4.7 percent against the dollar this week as the Bank of England faced mounting pressure to lower borrowing costs. The bank is prepared to cut its main rate from 3 percent, Governor Mervyn King said this week.

Canada's currency depreciated against its U.S. dollar on speculation that a slowdown in global economic growth may deepen, damping demand for commodities such as crude oil. The Canadian dollar dropped as much as 1.6 percent to C$1.2318 per U.S. dollar, from C$1.2119 yesterday. It traded at C$1.2237 at 2:11 p.m. in Toronto. One Canadian dollar buys 81.71 U.S. cents. The currency has lost 18 percent this year.,
11/14/2008 1:06:15 PM