The Japanese yen dropped against most of its major counterparts as a rise in U.S. stocks and weak Japan data encouraged Japanese investors to buy higher-yielding assets overseas. In early Asian trade, Japan’s Trade Ministry said retail sales slipped 2.8% in May from a year earlier. Another reported indicated that industrial production dropped 29.5% in May from a year earlier. On cross trading, aud/jpy jumped from 76.16 to 77.76, gbp/jpy surged from 156.75 to 159.32 and eur/jpy rallied from 133.36 to 135.50. DJI added 90.99 points or 1.08%, Nasdaq gained 5.84 points or 0.32% while S&P closed up 8.33 points or 0.91%
Earlier in the day, euro fell against the dollar after China’s central bank Zhou Xiaochuan said the greenback may keep dominating global trade and ruled out “sudden” changes in the foreign-exchange reserve policy of China. The single currency touched as low as 1.3982 against the dollar in late Asian afternoon, however, euro has found buying interest on dips as eurozone economic sentiment strengthened for the third month running in June (actual 73.3 versus consensus forecasts of 71.0). This upbeat data reduced demand for the greenback as a safe haven and sent European stocks higher as hopes grew that worst economic crises in decades may be easing. CAC and DAX index closed up more than 2% while FTSE gained 1.25%. The single extended intra-day rise to 1.4103 in New York afternoon before easing due to profit taking.
The British pound fell to as low as 1.6430 against the U.S. currency after comments from Zhou, however, it rose in tandem with the euro and hit an intra-day high of 1.6587 in late New York afternoon. The Swiss franc also strengthened from 1.0912 to 1.0809 against the dollar. Crude oil prices rose more than 2% on Monday as Nigeria’s main militant group said that its fighters had attacked an oil facility belonging to Royal Dutch Shell in Niger Delta.
The president of the Federal Reserve Bank of Boston Eric Rosengren said on Monday that U.S. gross domestic production is expected to turn positive in the second half of this year and the unemployment rate is likely to lag, so that the peak in the unemployment rate would be sometime early next year.
Data to be released on Tuesday includes Japan unemployment rate, housing starts, German unemployment rate, U.K. Gfk survey, current account, GDP, eurozone, CPI, Canada GDP, PPI, U.S. Chicago PMI and consumer confidence.