American focus: dollar and pound gained, euro and yen declined

The yen slumped the most since 2008 against the dollar as Japan stepped in to foreign-exchange markets to weaken the currency for the third time this year after its gain to a postwar record threatened exporters. The yen fell against all of its most-traded counterparts tracked by Bloomberg after Japan’s Finance Minister Jun Azumi ordered the intervention. The yen and franc have climbed to records this year as investors sought havens from fiscal crises in the U.S. and Europe. The yen and franc tend to strengthen in periods of financial turmoil because current-account surpluses in the nations make them less reliant on foreign capital. A stronger local currency hurts the overseas competitiveness of exporters and cuts the value of their overseas income when repatriated.

The dollar rose against all its major peers after MF Global Holdings Ltd. filed for bankruptcy after making bets on European sovereign debt, driving stocks down and boosting refuge demand.

The euro fell versus the dollar today after rising 1.8 percent last week as China’s official Xinhua News Agency said the nation can’t play the role of “savior” to Europe. Euro-region’s leaders agreed on Oct. 27 to increase their bailout fund to 1 trillion euros ($1.4 trillion) and recapitalize financial institutions. They convinced banks to write down their holdings of Greek debt by 50 percent. Italian bond yields have remained elevated, with the 10- year yield rising today as much as 16 basis points, or 0.16 percentage point, to 6.18 percent, the highest level since Aug. 5. Spanish yields increased as much as 15 basis points to 5.66 percent, matching the level Aug. 8.

The pound is turning into the must- have currency for investors seeking to get in on the world’s biggest government-bond rally. The combination of Prime Minister David Cameron’s fiscal austerity and Bank of England Governor Mervyn King’s efforts to bolster the economy with record-low interest rates and bond purchases are attracting investors seeking a haven from Europe’s debt crisis and political gridlock in the U.S. Reserves invested in pounds rose 12 percent in the first half, compared with a 9.6 percent gain for the euro and a 3.5 percent increase in the dollar.