Yen Falls as Bets Recession Reaching Bottom Pare Safety Demand

April 3 (Bloomberg) -- The yen declined beyond 135 against the euro for the first time since October on bets the worst of the global financial crisis may soon be over, reducing demand for Japan’s currency as a haven.

The dollar rose against the yen today as U.S. job losses last month were close to what economists forecast. New Zealand’s dollar advanced to the highest level against the yen since November after Group of 20 leaders pledged yesterday to triple the amount the International Monetary Fund can lend to crisis- stricken nations to $750 billion.

“This risk rally is better than previous ones,” said Mike Moran, a senior currency strategist at Standard Chartered Bank in New York. “I’m more optimistic because of the coherent policy response globally.”

The euro advanced 0.9 percent to 135.23 yen at 4:24 p.m. in New York, from 133.98 yesterday. It reached 135.26, the highest level since Oct. 21, extending its gain as U.S. stocks rose. The dollar gained 0.8 percent to 100.28 yen from 99.52, touching 100.38, the highest level since Nov. 4. The U.S. currency traded at $1.3486 per euro, compared with $1.3461.

The yen dropped against all of the other major currencies this week, falling 3.8 percent versus the euro, the biggest decline since October. The dollar posted a 2.5 percent gain versus the yen, the largest advance since February. The dollar fell 1.5 percent against the euro for the week.

New Zealand’s dollar rose as much as 2.7 percent to 59.03 yen, the highest level since Nov. 10, on speculation Japanese investors will seek higher-yielding assets overseas. The kiwi appreciated 5 percent this week and climbed 20 percent since the end of February, which was the biggest gain among the 16 most actively traded currencies tracked by Bloomberg.

U.S. Job Losses

Employers in the U.S. eliminated 663,000 jobs last month, following a reduction of 651,000 in February, the Labor Department reported today in Washington. The median forecast of 80 economists surveyed by Bloomberg News was for a drop of 660,000. The jobless rate increased to 8.5 percent, meeting the median forecast of economists.

“You are seeing glimmers of hope and evidence that investors are considering that this is close to the bottom, if not the bottom,” said Samarjit Shankar, director of global strategy in Boston at Bank of New York Mellon, which administers more than $20 trillion.

The G-20 turned yesterday to the Washington-based IMF to prevent the worst financial crisis since the Great Depression from swamping more developing nations. G-20 leaders gave approval in London for the IMF to raise $250 billion by issuing Special Drawing Rights, or SDRs, the synthetic currency the IMF uses to settle accounts among member nations.

Reserve Currency

The dollar’s role as a reserve currency won’t be threatened by the expansion in the IMF’s unit of account, according to UBS AG, ING Groep NV and Citigroup Inc.

All but three of the emerging-market currencies tracked by Bloomberg gained against dollar this week as governments and companies borrowed more in international bond markets this week than at any time in the past two years. The Polish zloty led the rally, advancing 6.3 percent to 3.3124.

“The greatest beneficiaries of the G-20 meeting were the emerging markets,” said Jessica Hoversen, a foreign-exchange analyst in Chicago at MF Global Ltd., the world’s largest broker of exchange-traded futures and options contracts. “Trade is the lifeblood of growth, particularly in emerging markets.”

The South African rand climbed 5.9 percent to 9.0495 versus the dollar this week, and the Mexican peso increased 5.9 percent to 13.5486 per dollar.

Pound Versus Dollar

The pound gained versus the euro today as Markit Economics said an index based on a survey of about 700 services companies in the U.K. by the Chartered Institute of Purchasing and Supply rose to a six-month high in March. Sterling increased 0.6 percent to 90.87 pence per euro.

The euro rose yesterday against the dollar after the European Central Bank cut the main refinancing rate less than economists forecast and deferred a decision on what other tools it can use to rescue its ailing economy. The ECB lowered its benchmark rate by a quarter-percentage point to 1.25 percent, less than the half-point reduction forecast by 49 of 55 economists in a Bloomberg survey.

“Longer-term, this is probably euro-negative as it confirms that the ECB is behind the curve,” said Jeremy Stretch, a senior currency strategist in London at Rabobank International, the biggest Dutch mortgage lender. The euro’s gain yesterday was a “knee-jerk reaction,” and the common currency may drop to $1.23 and 87 pence in six months, according to Stretch.

Beyond Resistance

The dollar may extend its rally against the yen after the U.S. currency rose beyond resistance at 97.88, according to RBC Capital Markets, citing trading patterns.

That level represents a descending trend line on a symmetrical-triangle pattern, wrote George Davis, chief technical analyst at RBC in Toronto, in a note yesterday. The triangle is formed during a pause in a trend by two parallel lines that connect one or more peaks and troughs in a currency. Resistance is where sell orders may be clustered.

“The dollar-yen managed to produce a bullish resolution of a symmetrical triangle this week,” Davis added. “The break above 97.88 has now exposed the 100.53 level as the next topside target to watch, followed by secondary resistance at 103.03.”