Yen, Dollar Gain as Commodities Drop Spurs Unwinding of Higher-Yield Bets

The yen and dollar strengthened against most major currencies as falling commodities prompted investors to unwind bets on higher-yielding assets.

Australia’s dollar was among the worst performers versus the greenback as China raised banks’ reserve requirements to restrain prices, adding to the likelihood its growth will slow, and Standard & Poor’s GSCI Index of 24 raw materials fell for a second day. The Dollar Index climbed to the highest in three weeks as U.S. retail sales and producer prices rose in April.

“The rising yen is a function of a risk-off move; from the end of April the carry trade wound up, and now is selling off,” said Jessica Hoversen, an analyst in New York at the futures broker MF Global Holdings Ltd. “The commodity currencies will trade weak today. We need to see some stability in the external environment before individuals feel comfortable taking on risk again.”

The dollar gained 0.3 percent versus the euro to $1.4153 at 8:57 a.m. in New York, from $1.4192 yesterday. The yen rose 0.1 percent to 80.97 per dollar. Against the euro, the Japanese currency appreciated 0.4 percent to 114.64 yen, after reaching 114.19, the strongest since March 28.

Norway’s krone rose versus most major peers, trading little changed versus the dollar at 5.5196, as the nation’s central bank raised interest rates.

Global investors have tempered their optimism about the U.S. and world economies and plan to put more of their money in cash and less in commodities over the next six months, a Bloomberg survey found. Thirty percent of those questioned intend to reduce investments in commodities, according to a quarterly poll of 1,263 investors, analysts and traders.