Dec. 3 (Bloomberg) -- The yen advanced from the lowest in two weeks against the dollar after Moody's Investors Service said it is preparing the biggest credit rating cuts since subprime mortgage defaults rocked financial markets.
The yen rose versus all of the 16 most-traded currencies as investors sold higher-yielding assets funded by loans from Japan, known as carry trades. The dollar fell against the euro on speculation a report will show slowing manufacturing growth, adding to pressure on the Federal Reserve to cut interest rates.
``The Moody's news over the weekend suggesting more writedowns prompted yen buying,'' said Sue Trinh, a currency strategist in Sydney at RBC Capital Markets, the second-most accurate exchange rate forecaster in Bloomberg News surveys. ``This is likely to continue for the next two months.''
The yen gained to 110.58 per dollar at 1:06 p.m. in Tokyo from 111.24 late in New York Nov. 30, the weakest since Nov. 16. Japan's currency traded at 162.10 per euro from 162.82. The dollar fell to $1.4659 per euro from $1.4633. The yen may rise to 110.50 per dollar and 162 per euro today, Trinh said.
The Australian and New Zealand dollars, favorites of the carry trade, fell the most against the yen. Australia's dollar dropped 1.2 percent to 97.23 yen, and New Zealand's dollar slipped 0.9 percent to 84.23. Moody's may lower ratings on $105 billion of debt sold by structured investment vehicles, the credit-rating company said in a statement Nov. 30.
The U.S. dollar traded at $2.0564 against the British pound from $2.0563 and was at 1.1278 versus the Swiss franc from 1.1318.
The yen also gained as Bank of Japan Governor Toshihiko Fukui said today the bank needs to be aware that keeping interest rates too low may make economic growth unsustainable and that he is still seeing volatility in the global financial markets.
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