27.07.201305:15:22UTC+00Yen powers up amid bolstering demand for refuge; Rand declines

The yen surged versus all of its 16 most-traded counterparts as investors sought safety amid a decline in Asian stocks after disappointing Japanese corporate profits.

The Bloomberg Dollar Index pulled back for a third week amid bets the Federal Reserve won’t signal a movement next week in financial stimulus. Japanese government 10-year bonds, which are sensitive to inflation, rose even as data showed consumer prices gained the most since 2008. The Japan-U.S. yield gap slightly change. South Africa’s rand retreated as China cut production capacity, damping trade prospects.

Dollar Bets

Bets that the greenback will gain versus eight peers including the euro, yen and pound fell to $28 billion as of July 23, a $1.3 billion decline to the lowest since July 9, according to CFTC data compiled by Societe Generale SA.

Rand, Real

The South African rand slid versus most major peers as China ordered more than 1,400 companies to cut excess production capacity, dimming the outlook for the country’s exporters. The currency dropped 0.5 percent to 9.7704 to the greenback.

Dollar Gauge

The Bloomberg Dollar Index fell before the Federal Open Market Committee holds its next meeting July 30-31. The currency index, which tracks the dollar against 10 major peers, was at 1,022.85, down 1 percent on the week and 0.1 percent today.

Japanese Stocks

Japanese stocks fell as Chipmaker Advantest Corp. plunged 9.7 percent after posting a 3.6 billion yen ($36 million) loss. JFE Holdings Inc., Japan’s No. 2 steelmaker, slid 8.3 percent after forecasting current profit that missed analyst estimates. The Topix stock index sank 2.9 percent, the most since June 13.

The MSCI AC Asia Pacific Index decreased 0.5 percent, and the Standard & Poor’s 500 Index of stocks was little changed.

Japan’s 10-year government-bond yields declined two basis points to 0.79 percent. They were 178 basis points less than comparable U.S. Treasuries (USGG10YR), little changed from yesterday. The gap was 167 basis points at the end of last week.

Consumer prices in Japan excluding fresh food climbed 0.4 percent in June from a year earlier, the statistics bureau said in Tokyo. The median estimate of economists surveyed by Bloomberg News was for an increase of 0.3 percent.

“We had the inflation data in Japan which was a bit higher than expected, and that’s reducing expectations of further monetary easing and giving a lift to the yen,” said Niels Christensen, chief currency strategist at Nordea Bank AB in Copenhagen.

The Japanese currency has lose stability for about 7.5 percent over the past six months against the dollar as officials have pushed to end deflation.