Forex: Weekly’s review

On Monday the euro touched the lowest level against the yen since February as Spanish bond yields touched a 2012 high after a minister called on the European Central Bank to do more to stem debt-market turmoil. The euro slid against the yen after the cost of insuring Spain’s debt reached a record and Jaime Garcia-Legaz, the nation’s deputy economy minister, said in an interview on April 13 that the ECB should “step up purchases of bonds.” The dollar rose earlier versus most major counterparts as data showed U.S. consumer purchases rose last month, damping speculation the Federal Reserve will add to monetary easing.

On Tuesday the yen fell versus all of its 16 most-traded peers as a report showing German investor confidence rose to a two-year high fueled appetite for riskier assets. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which is designed to predict economic developments six months in advance, increased to 23.4 from 22.3 in March. That’s the highest since June 2010. The euro was buoyed against the yen as increased demand at Spanish debt sales eased concern Europe’s sovereign- debt crisis is worsening.

On Wednesday the pound rose after Bank of England minutes showed policy maker Adam Posen ended a push for more stimulus. Euro fell against the dollar amid growing profitability of peripheral bonds. Thus, the yield on 10-year bond 5.87% Spain 5.71% against the previous.

On Thursday the yen fell against most of its major counterparts as Bank of Japan officials signaled they’ll keep acting to stem its strength to spur economic growth. The Bank of Japan is “committed” to monetary easing, Governor Masaaki Shirakawa said yesterday in a speech in New York. Europe’s shared currency fluctuated versus the dollar after yields on Spanish 10-year benchmark bonds and French five-year debt increased at auctions. Spain sold 2.54 billion euros ($3.33 billion) of two- and 10-year securities and France raised 10.5 billion euros in debt out of an 11 billion-euro goal.

On Friday the euro touched its strongest level in two weeks versus the dollar after German business confidence unexpectedly increased to a nine-month high, fueling investor appetite for risk. The Munich-based Ifo institute said today its business climate index, based on a survey of 7,000 executives, rose to 109.9 this month from 109.8 in March. The 17-nation currency gained for a fourth day versus the yen amid bets the International Monetary Fund will increase its lending capacity to help keep Europe’s debt crisis contained. Governments are leaning toward committing more than $400 billion in fresh funding for the IMF to help it protect the world economy against more fiscal turmoil in Europe. The U.K., Australia and Singapore joined Japan, Denmark and Switzerland among the countries to rally this week to Managing Director Lagarde’s call for capacity beyond the current $380 billion. She told reporters she expected the IMF’s firepower to be “significantly” increased.