2013.06.1904:40:18UTC+00Yen weakens second day against Dollar ahead of fed; Real plunges

The yen weakened for a second day versus the dollar as the Federal Reserve holds a two-day assembly that may give more information about when U.S. policy makers will begin to trim bond purchases.

Japan’s currency pared its gain this month after the nation’s central bank estimated the current-account balance increased to a record amid unprecedented financial stimulus. The real reached a four-year low, prompting the Brazilian central bank to interfere for a second straight day as a report showed higher-than-forecast inflation. The Swiss franc bolstered against all of its 16 major counterparts.

Real Weakens

Brazil’s central bank President Alexandre Tombini said policy makers are working to trim down the inflationary pressure that may stem from a decline in the real, the worst performing major currency in the past month. The real depreciated 0.5 percent to 2.1815 per U.S. dollar.

Price Swings

The JPMorgan Global FX Volatility Index increased to 10.46 percent from 10.25 percent yesterday after climbing to a one-year high of 11.43 percent on June 13. The average in the past 12 months is 8.65 percent.

Economic Update

Beginning construction of new U.S. homes increased in May and permits to build single-family houses rose to a five-year high, extending a rebound that is helping shore up the expansion. A separate report showed the cost of living in the U.S. rose less than forecast in May, signaling inflation remains under control.

Franc Gains

The Swiss franc advanced versus most of its major peers after the lower house of parliament voted against further deliberations of a law allowing banks to cooperate with the U.S., making it less likely the bill will pass.

“The deal would presumably result in potential outflow of franc deposits,” Valentin Marinov, head of European Group of 10 currency strategy at Citigroup Inc., wrote in the company’s FX Wire note. “If the deal is not approved in the lower house, this could help the franc regain more ground across the board.”

The Swiss currency inched up 0.1 percent to 1.2324 per euro and acquired 0.3 percent increase to 92.02 centimes per dollar.