The Japanese yen pared its Thursday's early Asian session gains against other major currencies and fell to a 1-week low versus the pound as stock markets in Asia gained today following the overnight gains on Wall Street and on buoyancy that the worst of the global recession is ending, encouraging investors to increase purchase of higher-yielding assets.
The benchmark Nikkei 225 Index was gaining 196.6 points or 2.35% to 8,548.51 and the broader Topix index of all First Section Issues was adding 16.91 points to 810.73.
On the economic front, the Bank of Japan said today that the monetary base in Japan was up 6.9% on year in March, standing at 94.46 trillion yen. That's up from 93.65 trillion yen in February, which saw a 6.4% annual increase. Seasonally adjusted, the monetary base was up 5.6% on month at 94.3 trillion yen. Through the first three months of 2009, the monetary base was up an annual 5.7% and a seasonally adjusted 17.2% compared to the previous quarter
Meanwhile, the Ministry of Finance said that Japanese investors bought a net 663.1 billion yen in foreign bonds and also purchased a net 246.4 billion yen in foreign stocks for the week ending March 28. Meanwhile, foreigners sold a net 189.7 billion yen in Japanese stocks and also sold a net 719.8 billion yen in foreign bonds.
The Japanese yen lost ground after hitting a high of 98.41 against the US dollar during early deals on Thursday. At 9:40 pm ET, the yen touched a low of 98.85 against the dollar, compared to 98.54 hit late New York Wednesday. The Japanese currency is currently trading at 98.77 versus greenback with 99.6 seen as the next target level.
The Japanese yen that closed Wednesday's North American session at 130.56 against the European currency reached a high of 130.32 at 8:15 pm ET. Thereafter, the yen reversed its direction and is currently quoted at 131.17 against the euro. The next downside target level for the Japanese currency is seen around 134.8.
The euro gained on optimism the ECB President Jean-Claude Trichet may signal that the bank will refrain from cutting interest rates further after lowering them later today. The governing council of the European Central Bank is expected to cut its overnight rate by 50 bps to 1 percent, a new historical low. The decision to cut rates is widely expected and all eyes will be on the ECB press conference hosted by Jean-Claude Trichet in Frankfurt.
The Japanese unit that climbed to 142.35 against the British pound during today's early Asian trading weakened thereafter. At 10:10 pm ET, the yen declined to a 1-week low of 143.31 against the pound, compared to Wednesday's closing value of 142.59. On the downside, 144.6 is seen as the next target level for the Japanese yen.
The yen slipped to 86.49 against the Swiss franc at 10:10 pm ET, moving from an early Asian session high of 85.92. If the Japanese currency falls further, 87.2 is seen as the next target level. The franc-yen pair is currently quoted at 86.36.
Before the ECB rate announcement, traders are likely to focus on the French producer price index for February, British nationwide house price and construction PMI reports in the upcoming European session.
Market participants also keenly await the outcome of the G-20 meeting and the market will be closely watching to see what measures they will discuss to fight the global economic crisis.
Across the Atlantic, the Labor Department is due to release its customary jobless claims report for the week ended March 27th at 8:30 am ET.
The Commerce Department is due to release its report on factory goods orders for February at 10 am ET. Orders for manufactured goods are likely to have decreased 0.3% in the month.
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