The Japanese yen fell to two week low against the greenback as a report showed that Japanese investors are favor in buying overseas assets. In addition, the U.S. data added credence to the view that the global recession is moderating and investors are selling the yen when they become more risk appetite as they treat the yen as a safe-heaven currency.
The dollar rose against the Japanese yen on growing demand for overseas financial instruments from Japanese investors as the yield differential between U.S. and Japanese 10-year notes increased to the widest in six month at 2.27% on Thursday. Furthermore, the unexpected decrease in U.S. weekly jobless claims (dropped to 623,000 from 636,000 in the previous week with forecasts of 630,000) pushed the greenback to as high as 97.24 against the yen in New York session. Cross selling in the yen broadly also lifted the pair. Eur/jpy rallied from 131.70 to 135.30, aud/jpy jumped from 73.92 to 76.26 while gbp/jpy hit the other fresh high for 2009 at 154.87.
Although the Bank of England policy maker David Blanchflower warned that there may be “many false dawns” the economy of U.K. and commented “pretty hard to see anything strong for 2010” earlier in the day, the market reaction to it was little. Cable traded as low as 1.5852 due to long liquidation in European session before rebounding to 1.6016 after the better-than-expected U.S. jobless claims data. However, crossing selling versus euro pressured the sterling. Eur/gbp rallied to its intra-day high at 0.8767 in New York afternoon.
Euro fell to this week’s low of 1.3793 against the dollar in Asian session. However, the single currency rebounded from there partly due to cross buy versus the yen and the release of better-than-expected German employment data (unemployment rate at 8.2% vs forecast of 8.4% whilst unemployment change also rose by a much lower-than-expected number at 1,000 in May vs forecast of an 67,000 increase). Eurozone economic sentiment also improved from 67.2 in April to 69.3 in May. The single currency hit its intra-day high at 1.3984 after the U.S. job data and partly due to cross buying versus yen and sterling in New York session.
On Friday, economic data releases include Japan manufacturing PMI, CPI, unemployment rate, industrial production and housing data, German retail sales, U.K. Gfk survey, nationwide house price, Eurozone unemployment rate, HICP flash, Switzerland Kof indicator, U.S. GDP, PCE, Chicago PMI and University of Michigan survey, Canada current account.