The Japanese yen plummeted across the board on Monday morning in Asia as worldwide equities rally and the global optimism buoyed by positive comments from U.S. Federal Reserve Chairman Ben Bernanke increased investors' risk appetite. The Japanese currency tumbled to new multi-month lows against its major counterparts.
The U.S. Federal Reserve Chairman Ben Bernanke said last week that he will use all tools available to him to stabilise financial markets. Bernanke said on Friday that programs enacted by the Federal Reserve to unfreeze the credit markets are working. Bernanke also praised the actions of policymakers as having lowered the cost and increased the availability of credit. In the midst of extraordinarily challenging times for the financial system and economy, Bernanke stated that he is confident that growth will be restored.
The positive comments from Bernanke eclipsed the negative data from the U.S. on Friday, with a greater-than-expected fall in non-farm payrolls in March took unemployment rate to a 25-year high of 8.5%.
The US Department of Labor said on Friday that non-farm payroll employment fell by 663,000 jobs in March following an unrevised decrease of 651,000 jobs in February. The drop in jobs came roughly in line with economists' expectations of a decrease of 658,000 levels. With the continued decrease in jobs, the unemployment rate rose to 8.5 percent in March from 8.1 percent in the previous month, in line with expectations. More than 5 million American have lost their jobs since the U.S. economy slipped into recession in December 2007.
Separately, the Institute for Supply Management released its report on activity in the service sector for March, showing that its index of activity in the sector unexpectedly fell to 40.8 in March from 41.6 in February, with a reading below 50 indicating a contraction in the sector.
The Japanese stock market opened higher today and is trading in positive territory, led by automakers. The benchmark Nikkei 225 Index, having opened strongly at 8,857 compared to its previous close of 8,750, is currently trading at 8,970, up 220.27 points, and the broader Topix index of all First Section Issues is gaining 11.85 points to 842.
On economic front, Japan will provide February figures for its leading index, with analysts expecting a score of 75.3 following the 77.2 market in January. Also, the Bank of Japan kicks off its two-day monetary policy meeting and will announce any adjustments to interest rates at its conclusion on Tuesday.
The yen plunged to 100.94 against the US dollar by 9:30 pm ET, the lowest level since October 21, 2008. If the yen declines further, support is seen around the 103 level.
The yen has been trading lower against the buck since it reached a weekly high of 95.97 on March 30. The yen has lost around 5 percent against the greenback since then. The pair that closed last week's deals at 100.27 is currently trading at 100.85.
The Japanese currency, which has been sliding since March 30, reached a new multi-month low of 137.08 against the euro in early Asian deals today. The euro-yen pair that closed Friday's deals at 135.27 is presently trading at 136.78.
The euro-zone producer price and retail sales reports-both for the month of February are due out in the upcoming session. Analysts expect the PPI to drop 1.5 percent, while the retail sales to decline 2.5 percent on year in February.
Against the Swiss franc, the yen tumbled to a fresh multi-month low of 89.75 by 9:30 pm ET. On the downside, the yen may test support near the 91 level. The franc-yen pair that closed last week's trading at 88.74 is currently worth near 89.6.
The yen also plunged to a new multi-month low of 150.81 against the UK's sterling by 9:30 pm ET, compared to Friday's close of 148.82.The next downside target for the yen is seen around the 156.25 level. The pound-yen pair is presently trading near 150.5.
Against the Canadian dollar, the Japanese yen reached a new multi-month low of 82.52 by 9:30 pm ET. The loonie-yen pair that closed last week's trading at 81.48 is currently quoted at 82.41. If the yen ticks down further, it may test a support level of 87.1.
The Japanese currency also slumped to new multi-month lows of 72.78 against the Australian dollar and 60.37 versus the New Zealand dollar by 9:30 pm ET. The yen, which closed last week's trading at 71.78 against the aussie and 58.85 versus the kiwi, is currently trading near 72.5 and 59.9, respectively.
Turning to the U.S., the Fed governor Kevin Warsh will speak about the financial markets at a conference in Washington D.C. at 1:00 pm ET.
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