The yen slumped to the lowest in more than six months against the US dollar on speculation that Japanese elections next month would hand power to an opposition party that advocates more aggressive monetary stimulus.
The Japanese currency weakened versus all of its 16 most-traded counterparts as Japanese Prime Minister Yoshihiko Noda said he would dissolve parliament, paving the way for elections that polls shows his Democratic Party of Japan would lose.
The euro gained against its US peer for the first time in four weeks after touching a two-month low. The pound fell to a 10-week low versus the greenback as data showed UK retail sales slid.
“Economic data globally has been weak,” Greg Anderson, the North American head of G10 currency strategy at Citigroup Inc in New York, said in a telephone interview. “Rising concerns that we are in a second-dip recession, maybe not in the US, but in Japan and the eurozone, has weighed on market sentiment all week long.”
The yen depreciated 2.3 percent to ￥81.32 per US dollar in New York this week, its biggest drop since February. The Japanese currency declined 2.5 percent to ￥103.60 per euro, its most pronounced fall since September. The euro added 0.2 percent to US$1.2743.
The dollar gained against the majority of its most-traded peers this week as a haven play on speculation US President Barack Obama and congressional lawmakers would be unable to avoid the fiscal cliff.
The Dollar Index, which measures the currency against the euro, yen, pound, Swiss franc, Canadian dollar and Swedish krona, ended the week up 0.2 percent at 81.192, after touching the highest level since Sept. 5.
Britain’s pound fell on Thursday to its lowest level since Sept. 5 after data showed retail sales, including fuel, dropped 0.8 percent last month from September, when they gained a revised 0.5 percent. The median forecast in a Bloomberg News survey was for a 0.1 percent decline.
Sterling declined 0.1 percent to US$1.5888 after touching US$1.5829. It slid 0.3 percent to ￡0.8017 per euro.