RTTNews - Thursday in Asia, the yen strengthened against its major counterparts as a fall in Asian stocks prompted investors to reduce holdings of higher-yielding assets funded in Japan.
The edged up to a new multi-week high against the pound, 8-day high against the loonie and the franc and 6-day highs against the euro, dollar, aussie and the kiwi.
Asian markets are mostly trading weak today, with investors looking to take profits after recent rallies. Though economic data from U.S. and other parts of the globe have been fairly encouraging, a section of investors appear to believe a full recovery is still some way off. Losses are not any significantly sharp today with traders stepping in and hunting for bargains at lower levels.
Tokyo stocks drifted sharply lower as investors indulged in profit taking after the previous session's strong gains. The mood is a bit cautious ahead of Sunday's House of Representatives election.
A stronger yen also weighed on investor sentiment. Japan's 0.1% interest rate help speculators get funds with low borrowing costs and invest where returns are higher. Speculators profit due to the spread between both rates. Nevertheless, currency fluctuations can erase profits between the two rates.
A stronger yen also makes Japan-made goods less competitive overseas and deflates exporters' earnings abroad when converted back into the Japanese currency, hurting their profits and weighing on the export-dependent economy.
Japan's benchmark Nikkei 225 index is currently trading 181.71 points down or 1.44% at 10,458.0.
Meanwhile, South Korea's Kospi lost 1.19%, Hong Kong's Hang Seng dropped 1.26% and China's Shangai Composite index fell 0.59%.
During Asian deals on Thursday, the yen soared to 151.75 against the pound. This set the highest point for the yen since July 14. If the yen gains further, it may find resistance around the 147.2 level. At yesterday's close, the pound-yen pair was quoted at 153.21.
After hitting a 9-month low of 163.13 against the pound on August 07, the yen advanced 7% thus far.
The yen that closed yesterday's trading at 94.29 against the dollar strengthened to a 6-day high of 93.60 in Asian deals on Thursday. The next upside target level for the Japanese currency is seen at 93.1.
The yen has been in an upward channel against the dollar after falling to near an 8-week low of 97.80 on August 07. Since then, the yen has appreciated 4% against the U.S. currency.
In Asian deals on Thursday, the yen climbed to a 6-day high of 133.27 against the euro. This may be compared to Wednesday's close of 134.41. On the upside, 132.9 is seen as the next target level for the yen.
The yen jumped to a 4-week high of 132.2 against the euro on August 19. Although the yen lost 3% thereafter, it rebounded after touching a 10-day low of 136.11 on August 24. Since then, the yen has strengthened 2% against the euro.
Against the Swiss franc, the yen rose to an 8-day high of 87.62 in Asian deals on Thursday. If the yen edges up further, it may test resistance around the 87.2 level. The franc-yen pair was worth 88.33 at Wednesday's close.
The yen that tumbled to an 11-day low of 89.66 against the franc on August 24 has gained more than 2% since then.
During Asian trading on Thursday, the yen jumped to a 6-day high of 77.36 against the Aussie and 63.53 against the NZ dollar. The next upside target level for the yen is seen at 76.9 against the aussie and 62.8 against the kiwi. The aussie-yen and the kiwi-yen pairs were worth 78.10 and 64.28, respectively at yesterday's close.
New Zealand posted a trade deficit of NZ$163 million in July, Statistics New Zealand said today, marking the smallest deficit in six years. Analysts had been expecting a shortfall of NZ$150 million following the revised deficit of NZ$332 million in June.
The yen surged up to an 8-day high of 85.25 against the Canadian dollar in Asian deals on Thursday. If the yen advances further, 84.4 level is seen as the next target for the yen. The loonie-yen pair closed yesterday's trading at 85.87.
A drop in oil price weakened the Canadian currency. Oil fell toward $71 today, extending losses by more than $3 after touching a 10-month high this week, as rising crude and diesel stocks eclipsed healthy economic data from the United States and Europe.
U.S. crude for October fell 15 cents to $71.28 a barrel in Asian deals, retreating further from $75 hit earlier this week, the highest level since October. Brent crude fell 20 cents to $71.45 a barrel.
The German GfK consumer confidence for September, Italian consumer confidence for August, Euro-zone M3 money supply for July and the U.K. second quarter total business investment reports are expected to influence trading in the upcoming European session.
From the U.S., the Bureau of Economic Analysis is due to release its preliminary second quarter GDP report at 8:30 am ET. The report is likely to show that the U.S. economy contracted at a 1.4% rate in the quarter.
At the same time, the Labor Department is due to release its customary weekly jobless claims report for the week ended August 23.
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