Yen Declines to 1-Week Low Versus Euro as Crisis Concern Eases

April 14 (Bloomberg) -- The yen fell to a one-week low against the euro on speculation that the worst of the global financial crisis is over, prompting investors to purchase higher-yielding assets financed in Japan.

The Japanese currency declined for a second day versus the Australian and New Zealand dollars on prospects that U.S. banks this week will disclose better first-quarter results than some analysts estimate, boosting demand for so-called carry trades. An index tracking the dollar versus the currencies of six major U.S. trading partners dropped the most in more than three weeks on decreased demand for the safety of the greenback.

“There are hopes that U.S. banks will reveal better-than- expected earnings, which may allay worries over the crisis,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan’s largest currency broker. “The bias for the yen is to weaken” to 100.50 against the dollar and 134.00 per euro today, he said.

The yen traded at 134.21 per euro, the lowest level since April 7, at 8:52 a.m. in Tokyo from 133.81 in New York yesterday. Japan’s currency was at 100.36 versus the dollar from 100.10. Against the yen, Australia’s dollar traded at 73.41 from 73.25 and New Zealand’s dollar was at 59.43 from 59.30.

The euro fetched $1.3371 from $1.3368 in New York yesterday when it touched $1.3373, the strongest since April 7. The Dollar Index fell 1.3 percent yesterday to 84.635, the biggest decrease since March 19. The ICE uses the index to track the greenback against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona.

U.S. Banks

After financial markets closed yesterday, Goldman Sachs Group Inc. reported first-quarter earnings of $1.81 billion, or $3.39 a share, exceeding the average analyst estimate of $1.64 a share. Goldman Sachs, Citigroup Inc., and JPMorgan Chase & Co. are among more than 30 Standard & Poor’s 500 companies scheduled to announce results this week.

In carry trades, investors get funds in a country with relatively low borrowing costs and invest in another with higher interest rates. The risk is market moves can erase those profits. The benchmark interest rate is 0.1 percent in Japan, compared with 3 percent in Australia and in New Zealand.