RTTNews - Thursday in Asia, the yen tumbled against its major counterparts as Asian stocks rose today amid growing optimism about the prospects of a global economic revival. The yen plunged to a new multi-week low against the NZ dollar and 2-day lows against the rest of majors.
Benchmark interest rates are 3 percent in Australia and 2.5 percent in New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to the South Pacific nations' higher-yielding assets. The risk in such trades is that currency market moves will erase profits.
At 1:28 am ET, Japan's benchmark index Nikkei was up 107.83 points or 1.11% at 9,830.99.
A lower-than-expected Japan's trade surplus report also weakened the yen today.
According to the data released by the Ministry of Finance, Japan's merchandise trade surplus widened in June for the first time in 20 months, expanding by 388% from a year earlier to Y508 billion. The figure was worse than the Y610 billion surplus expected by economists. In May the surplus was Y299.8 billion.
While exports fell by 35.7% in June for the ninth straight month, smaller than the 40.9% plunge in May, imports declined for the eighth straight monthly as it fell 41.9% in June, after falling 42.4% in May.
The yen slumped to 62.34 against the New Zealand dollar during Asian deals on Thursday. This set the lowest point for the yen since July 01. If the yen weakens further, it may likely target the 63.0 level. At yesterday's close, the kiwi-yen pair was quoted at 61.68.
The yen has been in a downward channel against the kiwi after it reached a 7-week high of 56.96 on July 08. The NZ dollar was supported by encouraging economic reports and dovish comments from the RBNZ Governor.
Retail sales in New Zealand showed the biggest monthly rise in May since November 2007, while the nation's consumer prices rose at the slowest pace in almost two years in the second quarter.
Governor of the Reserve Bank of New Zealand, Alan Bollard said last week that the economy is likely to start recovering earlier than other nations. In an address to the Hawke's Bay Chamber of Commerce, Bollard said early signs of global recovery have now emerged.
According to Bollard, what is needed is for the New Zealand dollar to be persistently weak over the coming years, to encourage the needed business investment to be export-oriented and supportive of improvement in New Zealand's external liability position.
Thus far, the yen has lost 9% against the kiwi from a 7-week high.
During Asian deals on Thursday, the yen fell to a 2-day low of 134.33 against the euro and 88.58 against the Swiss franc. The next downside target level for the Japanese currency is seen at 134.8 against the euro and 88.7 against the franc. The euro-yen and the franc-yen pairs were worth 133.15 and 87.87, respectively at yesterday's close.
Against the currency of U.S., the yen declined to a 2-day low of 94.33 in Asian deals on Thursday. On the downside, 94.8 is seen as the next target level for the Japanese currency.
After hitting a 5-month high of 91.76 against the dollar on July 13, the yen dropped 3% on the back of strong equities and fell to a 12-day low of 94.80 on July 20.
But the yen recouped losses on Tuesday after the release of the Bank of Japan's June meeting minutes, which showed that the Japanese economy had stopped worsening. The minutes revealed that board members agreed that economy was likely to show clear signs of leveling out over time, in line with their projections made in April.
The yen extended its uptrend yesterday and reached an 8-day high of 93.11 in European deals. However, the dollar got a boost in the New York session yesterday as the Federal Reserve Chairman Ben Bernanke reiterated that the U.S. economy is showing signs of stabilization.
Bernanke redelivered his address regarding monetary policy before the Senate Banking Committee while also fielding questions regarding the current and near-term economic outlook. In his prepared remarks, Bernanke noted that the economy is still in a fragile state, with unemployment high and consumer spending shaky.
The yen has depreciated more than 1% against the dollar from an 8-day high.
In Asian deals on Thursday, the yen plunged to a 2-day low of 155.55 against the pound. This may be compared to yesterday's close of 154.37. If the yen falls further, it may likely target the 156.5 level.
The yen has slipped 2% against the pound since reaching an 8-day high of 152.38 yesterday. The pound recovered from an 8-day low as the minutes of the Bank of England's July meeting released yesterday revealed that all nine members of the Monetary Policy Committee unanimously decided to continue with its quantitative easing measures worth GBP 125 billion and also stood united in retaining the Bank Rate at a historic low of 0.5%.
The yen plummeted to a 2-day low of 85.89 against the Canadian dollar and 77.21 against the Australian dollar. The next downside target level for the Japanese currency is seen at 86.0 against the loonie and 78.3 against the aussie. The aussie-yen pair closed trading at 86.38 against the loonie-yen pair at 85.18 on Wednesday.
In the upcoming European session, the French July business confidence indicator, U.K. June retail sales, Euro-zone May current account, Italian May retail sales and June trade balance are expected to influence trading.
Across the Atlantic, the U.S. existing home sales for June and the weekly jobless claims report have been scheduled for release.
The Bank of Canada is due to release its monetary policy report at 10:30 am ET. On Tuesday, the Bank of Canada decided to leave its interest rate unchanged at 0.25%.
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