RTTNews - Tuesday during Asian deals, the US dollar and the Japanese yen soared against their key counterparts as the global stock market weakness boosted demand for currencies perceived as safe havens.

The dollar and the yen are viewed as safe-haven currencies and tend to attract buying when worries about the global economy and financial markets flare up, but come under pressure when such concerns recede.

Stocks across the Asia-Pacific are substantially down, dragging higher yielding currencies lower and bolstering demand for the low-yielding currencies like the dollar and the yen. The flat close on Wall Street overnight and a lack of prominent triggers to warrant any significant buying activity are contributing to the weakness today.

Yesterday, the Asian markets ended sharply higher following Wall Street gains on Friday, after Fed Chairman Ben Bernanke said that the prospects for a return to growth in the near term appear good.

In early trading, Australia's benchmark S&P/ASX 200 index , which fell to 4,390, is currently down by 23 points, or 0.5%, at 4,403 and Japan's key Nikkei index which dropped down to 10,489 earlier this morning, is currently trading at 10,513, down 68 points or 0.64% from its previous close. These markets are trading taking cues from Wall Street where the Nasdaq drifted down by 2.92 points to 2,018 and the S&P 500 ended 0.56 points down at 1,026. Moving in a choppy manner in late session, the Dow ended the day with a small gain of 3.32 points at 9,509.

On Wall Street yesterday, stocks drifted lower after some early strength as market sentiment was slightly hit by comments from noted economist Nouriel Roubini about a possible double recession.The global economy is starting to bottom out from the worst recession and financial crisis since the Great Depression, Roubini wrote in an opinion piece in the Financial Times on Sunday.

The professor stated that in many advanced economies, such as the U.S., UK, Spain, Italy and other Eurozone members and some emerging European economies, the recession will not be formally over before the end of this year, as green shoots are still mixed with weeds.

The dollar strengthened in Tuesday's early trading versus the euro and climbed to a 4-day high of 1.4275. If the dollar rises further, 1.421 is seen as the next likely target level. The euro-dollar pair closed Monday's deals at 1.4306.

Reports that U.S. President Barack Obama nominated Federal Reserve Chairman Ben Bernanke for a second four-year term, also seemed to have an impact on dollar. Bernanke's term was to expire at the end of January, and his reappointment will require senate confirmation. His term as a policy board member does not expire until 2020.

Bernanke led the biggest expansion of the central bank to avert a second great depression, pared the primary interest rate to near zero, led the rescue of Bear Stearns and American International Group and also poured $1 trillion into the financial system to stabilize the banks.

The Fed chief still has to contend with an economy that has been mired in recession for more than a year, an unemployment rate approaching 10 percent and the threat of runaway inflation following trillions of dollars in stimulus spending.

The U.S. currency rallied to a 6-day high of 1.6386 against the pound during Tuesday's early trading, compared to 1.6419 hit late yesterday in New York. On the upside, the next likely target for the US dollar is seen around the 1.627 level.

Against the currency of Switzerland, the U.S. dollar spiked up during Tuesday's early trading. The dollar-franc pair edged up to 1.0632. If the greenback rises further, 1.068 is seen as the next target level. At yesterday's New York session close, the pair was quoted at 1.0615.

The U.S. dollar also traded higher against commodity related currencies. The dollar climbed to 0.6840 against the New Zealand dollar, from Monday's closing value of 0.6855.

The latest Survey of Expectations report from the Reserve Bank of New Zealand showed that business managers expect a 0.4% rise in the consumer price index for the September quarter on a quarterly basis, unchanged from their expectations in the second quarter. For the fourth quarter, managers are expecting a 0.5% increase.

On an annual basis, respondents expect a 0.8% rise in the consumer price index for the year to September quarter and a 1.7% increase for the year to December quarter.

The greenback climbed to 1.0787 against the Canadian dollar and a 4-day high of 0.8349 against the Australian dollar, compared to yesterday's closing values of 1.0765 and 0.8391, respectively.

But the dollar weakened versus the yen, as the Japanese currency rallied across the board. The dollar dropped to 93.98 against the yen, compared to 94.58 hit late Monday in New York. If the dollar moves down further, it may test support around the 93.1 level.

From the U.S., the S&P/Case-Shiller home price index, is scheduled to be released at 9 am Economists expect a 16.40% year-over-year decline in the 20-city composite house price index for June.

After one hour, the Conference Board is scheduled to release its consumer confidence report for August. The report is expected to show that the consumer confidence index rose to 48 in August.

The yen climbed against other major currencies as stock market declines prompted investors to flock to safe haven assets.

During Asian deals on Tuesday, the yen strengthened to 154.01 against the British pound. This set a 4-day high for the Japanese unit. If the yen climbs further, it may likely target the 153.5 level. The pound-yen pair closed Monday's deals at 155.28.

Against the currencies of Europe and Switzerland, the yen climbed to 134.24 and 88.51 by about 10:30 pm ET. This may be compared to Monday's New York session closing values of 135.29 and 89.14, respectively. The next upside target level for the yen is seen at 132.2 against the franc and 87.2 against the euro.

In the European session, the German second quarter final GDP report, the Swiss second quarter preliminary employment report and the UBS consumption indicator are expected.

For comments and feedback: contact editorial@rttnews.com