The Japanese yen recovered from new multi-month lows against its major counterparts in Asian deals on Friday as Asian stocks pared gains, tempering demand for higher-yielding assets.
The Japanese stock market opened higher and is trading in positive territory today morning, taking the cues from Wall Street where the major indices rose for the third consecutive day on expectations that the global economy is showing signs of stabilization.
In early morning trading, the benchmark Nikkei 225 Index, having opened strongly at 8,814 compared to its previous close of 8,720, is currently trading at 8,765, up 45.43 points, and the broader Topix index of all First Section Issues is gaining 9.85 points to 837.
Against the US dollar, the Japanese yen edged down to 100.19 during early Asian deals on Friday. This set the lowest point for the yen since November 4, 2008. Thereafter, the Japanese currency reversed its direction and is currently trading at 99.75 against the greenback with 97.4 seen as the next target level.
The Japanese yen that closed Thursday's North American session at 134.01 against the European currency declined to a new multi-month low of 135.02 at 8:20 pm ET. Thereafter, the yen gained ground and is currently quoted at 133.91 against the euro. The next upside target level for the Japanese currency is seen around 128.5.
The European Central Bank yesterday lowered its key interest rate by 25 basis points to a new low of 1.25%, defying expectations for a larger reduction of 50 basis points.
In its meeting held in Frankfurt, Germany, the Governing Council of the central bank also reduced the interest rate on marginal lending facility and that on the deposit facility to 2.25% and 0.25%, respectively.
The head of the European Central Bank hinted that policy-makers for the 16-nation currency could announce further non-standard policy measures in the next rate-setting session in May.
Non-conventional monetary policy measures are being increasingly embraced in the developed world. In March, the Bank of England had announced a GBP 75 billion-asset purchase scheme to kick-start the UK economy that is slipping deeper into recession, while the interest rates are at record low.
The Japanese unit plunged to 147.90 against the British pound at 8:20 pm Eastern time, its lowest since November 27, 2008. Thereafter, the yen bounced back and climbed to 146.15 versus the pound, compared to 146.60 hit late New York Thursday. On the upside, 141.8 is seen as the next target level for the Japanese yen.
The Japanese yen advanced to 87.55 against the Swiss franc at 10:20 pm Eastern time, moving from an early Asian session new multi-month low of 88.38. If the Japanese currency gains further, 85.9 is seen as the next target level. The franc-yen pair is now worth 87.84.
Traders had their eyes on the G-20 Summit in London, with the world leaders assembled at the meeting pledging to do whatever is necessary to end the economic crisis. President Barack Obama called the agreements reached by leaders a turning point in our pursuit of global economic recovery.
The G-20 tripled resources for the International Monetary Fund to US$750 billion and will spend at least US$250 billion over the next two years to ease trade finance, it said in its communiqué. It will also set up a new Financial Stability Board to enforce stricter regulations on hedge funds, executive pay, credit-rating firms and risk-taking by banks.
From the euro area, German import price index, Italian PPI and the services PMI data from Italy, France, Germany and the euro zone are due out in the upcoming session.
Across the Atlantic, the Labor Department is scheduled to release its monthly non-farm payroll report at 8:30 AM. Economists estimate that the U.S. economy lost 656,000 jobs in March and look for an unemployment rate of 8.5%.
The ISM is scheduled to release the results of its non-manufacturing survey at 10 AM ET. The non-manufacturing index is likely to show a reading of 42 for March.
Bernanke is due to deliver closing keynote address to Richmond Fed Bank's 2009 Credit Markets Symposium in Charlotte, North Caroline at 12 PM ET.
For comments and feedback: contact email@example.com