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The yen fell to the lowest level in 10 months against the euro on speculation central banks in Europe and the U.S. are closer to removing stimulus as the global economy recovers.
Japan’s currency weakened against all of its major counterparts as the European Central Bank member Jozef Makuch said it is “highly probable” that the bank will raise interest rates next week. St. Louis Federal Reserve President James Bullard said signs of an improving economy may lead the central bank to curtail debt buying.
The euro pared losses against the dollar after U.S. consumer confidence dropped to a three-month low of 63.4, according to the Conference Board’s confidence index.
The shared currency’s strength was unfazed against the yen as Standard & Poor’s Ratings services lowered Portugal’s sovereign credit ratings to BBB-/A-3. BBB- is the lowest investment grade. Greece was also cut by S&P to BB- from BB+ and its outlook remains negative.
The ECB will lift its main refinancing rate by 25 basis points to 1.25 percent at its April 7 meeting, according to the median forecast of economists.
Europe’s rate will reach 1.75 percent by the end of this year, up from the current record low 1 percent, while the Fed will lift rates in the first quarter of next year and the Bank of Japan will leave its key interest rate unchanged.