2013.08.0707:06:52UTC+00Yen reaches 6-week high as BOJ meets before current-account data

The yen reached a six-week high as the Bank of Japan begins a meeting today on prospects it will stay away from adding to unprecedented stimulus that pushed to weaken the currency 11 percent versus the dollar this year.

The yen skyrocketed up versus all 16 major counterparts before data tomorrow that may display Japan recorded a current-account surplus for a fifth-straight month. The pound maintained a pullback versus the euro before Bank of England Governor Mark Carney speaks today about implementing forward guidance aimed at anchoring interest rates. The euro was 0.4 percent from a seven-week high versus the greenback before German data forecast to show industrial production rose.

Current-Account Balance

The yen was the biggest loser over the past 12 months in a basket of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes, dropping 20 percent. The best performer was the euro, which rose 10 percent during the period.

‘Good Improvement’

Fed Bank of Chicago President Charles Evans, who has been among the most vocal proponents of monetary accommodation, said there has been “good improvement” in the labor market and indicated that a September tapering is possible.

Forward Guidance

Barclays Plc expects the BOE to tie its commitment to low borrowing costs with unemployment levels.

“Market positioning suggests investors have already priced in a dovish scenario to some extent,”Chris Walker, a foreign-exchange strategist at the London-based bank, wrote in a research note yesterday. “While we would view this step as a dovish signal, the impact on the currency may not be particularly dramatic.”

In Germany, industrial production probably rose 0.3 percent in June from May, economists forecast before a report from the Economy Ministry in Berlin today. Data yesterday showed that German factory orders jumped the same month by the most since October.

European Central Bank President Mario Draghi said last week that economic indicators signal the currency bloc is past the worst of its longest-ever recession, while reiterating that interest rates will stay low for the foreseeable future.