2014.03.1108:38:20UTC+00Yen Bolsters as Pound Pulls back

The yen marched higher against 10 of its 16 major counterparts as appetite for riskier assets cooled after China reported the largest trade deficit in two years and the slowest hike in consumer financial values in 13 months.

Sterling sagged down as Bank of England Deputy Governor Charlie Bean said further strength in the currency may block the U.K.’s economic recovery. Australia's dollar declined versus most major counterparts after China, the nation’s largest trade partner, said March 8 exports backslide. Ukraine started military drills as Russian forces tightened their hold on the Crimean peninsula. A gauge of foreign-traded volatility was at almost the weakest since 2012.

Markets are “slightly risk-off indeed, mostly on the back of weak China data over the weekend,” said Masafumi Takada, a director at BNP Paribas SA in New York. There’s “nothing really new on Ukraine stuff, but obviously yen is one of the few currencies you can buy in an uncertain market.”

The yen soared as much as 0.6 percent to 142.44 per euro before exchanging with a slight alteration at 143.30 at 5 p.m. in New York. The Japanese currency moved a little at 103.26 per dollar, and skyrocketed 0.5 percent to 93.14 per Australian dollar. Europe's shared currency exchanged at $1.3875.

The Aussie relinquished 0.5 percent to 90.23 U.S. cents after increasing to 91.33 cents on March 7, the best performing mark since December 11. The pound plummeted 0.4 percent to 83.37 pence per euro and recorded a 0.4 percent drop to $1.6645.

Deutsche Bank AG’s Currency Volatility Index, a gauge of future financial worth swings, was at 7.28 percent after slumping to 7.25 percent on February 25, the least since December 2012.

Chinese Exports

China’s exports surprisingly sagged down 18.1 percent in February from a year earlier, customs data showed March 8, compared with a projection for a hike of 7.5 percent in a Bloomberg News survey. Imports rallied 10.1 percent, leaving an exchange deficit of $23 billion, the report showed.

Consumer financial values in the world’s second-biggest economy bolstered 2 percent in February, the least since January 2013.

The People’s Bank of China trim down the yuan’s reference rate by 0.18 percent, the most since July 2012. The currency pulled back 0.2 percent to 6.1385 per dollar, based from China Foreign Exchange Trade System prices.

“We’ve peeled back on the Aussie, but it hasn’t really fallen back that far,” said Steve Barrow, London-based head of Group-of-10 research at Standard Bank Plc. “In Europe, we’re seeing pretty low currency volatility and the markets seem quite hemmed in.”

Biggest Decliner

The Aussie plummeted 14 percent in the past 12 months, the lowest mover of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted indexes, amid indications of a slowdown in China. The euro increased 6.9 percent, while the dollar jumped 0.6 percent.

“AUD is trading lower in the wake of the disappointing trade release from China, likely reflecting fears on possible slowing in Chinese demand for Australian exports,” Todd Elmer, a Singapore-based currency strategist at Citigroup Inc., wrote in an e-mailed note to clients. “Chasing AUD weakness on the Chinese data may not be warranted,” he said, as the links between the nations’ economies may have weakened.

Mexico’s peso backed down from the best performing mark in seven weeks. The currency downgraded 0.2 percent to 13.215 per dollar after touching 13.1091 on March 7, the strongest since January 15.

Dollar Advances

The Bloomberg Dollar Spot Index soared for a second day amid speculation the world’s largest economy is gaining momentum. The gauge, which records the greenback versus 10 major counterparts, inched up 0.1 percent to 1,017.75. It moved down to as low as 1,012.27 on March 7, the weakest since December 11, before reversing declines after a U.S. jobs report.

The Labor Department data on March 7 showed U.S. employers hired more employees in February than economists estimated, signalling the economy is beginning to recover from a weather-induced setback. The 175,000-job hike in employment compared with a forecast of 149,000 and followed a revised 129,000 gain in January.

U.S. retail sales inched up 0.2 percent last month after a 0.4 percent decrease in January, and an index of consumer confidence bolster in March after moving down in February, economists surveyed by Bloomberg projected before data this week.

UBS AG Chairman Axel Weber said he expects the euro and yen to sagged down versus the dollar because the world’s three major central banks are on different paths.

‘New Phase’

The Bank of Japan, the European Central Bank, and the U.S. Federal Reserve have entered a “new phase,” Weber, an ex president of Germany’s Bundesbank, stated in an interview with Bloomberg Television. The Fed has started to allow interest rates to increase by trimming down its bond purchases and will continue to do so, he said.

Weber stated that the U.S. will possibly boost interest rates some time next year. UBS, Switzerland’s largest bank, expects the euro to move lower against the dollar “in the long term,” according to Weber. The bank expects the yen to fall “strongly” against the dollar, he said.

The Fed is trimming bond purchases that were designed to hold down long-term borrowing costs, citing economic progress. Policy makers have slash the monthly purchasing to $65 billion this year, from $85 billion last year, and said the program may conclude by year-end if the economy continues to improve.

The U.S. central bank has kept its benchmark interest-rate target in a range of zero to 0.25 percent since 2008.

Ukraine’s armed forces are testing the combat-readiness of troops, the Defense Ministry said today on its website, reiterating the government’s desire for a peaceful end to the standoff in the former Soviet republic’s eastern provinces.

Russia, which has vowed to defend the ethnic Russians that dominate Crimea after an uprising in Kiev, accused Ukraine of ignoring radicals in the nation’s east.