RTTNews - Friday during early deals, the yen slumped against its major counterparts as a gain in most Asian stocks prompted investors to buy higher-yielding assets with money borrowed from Japan.
The yen plunged to 3-day lows against the greenback, the euro and the aussie and fell to 2-day lows against the pound and the loonie.
Against the Swiss franc and the NZ dollar, the yen showed modest weakness.
The recovery in equities shows there is increased risk appetite, and that hurts low-yielding currencies like the yen and the dollar.
In carry trades, investors get funds in a country with low borrowing costs and invest in one with higher returns, earning the spread between the two. The risk is currency fluctuations erase profits between the two rates.
Most Asian stocks rose today as an upbeat U.S. factory and jobs data provided more evidence that the global economy is recovering from its deep recession.
The signs of economic green shoots halted the week's stock market slide and bolstered hopes the world's biggest economy, which has been in recession since December 2007, has hit bottom.
While data on Thursday showed that the number of U.S. workers filing new claims for jobless benefits rose in the latest week, economists were heartened by the first drop in the number of unemployed people remaining on benefit rolls since January and the biggest decline since November 2001.
Investors were also comforted by the slowing pace of contraction in the Philadelphia Federal Reserve's regional gauge of manufacturing and a rise in expectations in the index to its highest since September 2003.
Tokyo stocks closed higher today. The Nikkei 225 Stock Average added 82.54, or 0.9 percent, to close at 9,786.26 in Tokyo. The broader Topix index rose 7.76, or 0.9 percent,
The Bank of Japan today released the minutes of its policy board meeting held May 21-22. Minutes of the meeting showed that some Bank of Japan policy board members said the timing of the termination of temporary measures to increase liquidity depends on market conditions.
Some members said that whether or not the bank would continue with various temporary measures, which were to be terminated on or after Sept. 30, should be determined based on close examination of developments in financial markets and corporate financing, the summary of meeting discussions said.
At the meeting, the BOJ upgraded its economic view for the first time since July 2006, saying that although economic conditions have been deteriorating, exports and production are beginning to level out. The board also voted to keep its policy target rate unchanged at 0.1%.
The yen fell against its European and U.S. counterparts in early deals on Friday. At 2:35 am ET, the yen hit a 3-day low of 135.06 against the euro and 96.99 against the dollar, compared to yesterday's close of 134.28 and 96.58, respectively. If the Japanese currency slips further, it may likely target 135.4 against the euro and 97.3 against the dollar.
Germany's Federal Statistical Office said today that the producer price index or PPI dropped 3.6% year-over-year in May, after falling 2.7% in April. This was the lowest annual rate of PPI since April 1987. The producer prices figure in May came in line with economists' expectations.
On a monthly basis, the PPI remained unchanged in May, compared with a 1.4% fall in the preceding month.
In early deals on Friday, the yen dropped to a 2-day low of 158.81 against the British pound. The next downside target level for the Japanese currency is seen at 159.4. At yesterday's close, the pound-yen pair was quoted at 157.79.
The yen that closed yesterday's trading at 88.95 against the Swiss franc slipped to 89.35 in early deals on Friday. On the downside, 89.8 is seen as the next target level for the Japanese currency.
The yen also weakened against commodity-related currencies as higher oil prices boosted the Aussie, the kiwi and the loonie.
Crude oil prices rose toward $72 a barrel today on bullish U.S. economic data and supply concerns in OPEC member Nigeria.
U.S. crude rose 28 cents to $71.65 a barrel at 1:36 am ET, and London Brent crude gained 23 cents to $71.29.
The yen slumped to a 3-day low of 78.10 against the Aussie and a 2-day low of 85.79 against the Canadian dollar in today's early trading. The next downside target level for the Japanese currency is seen at 78.4 against the aussie and 86.6 against the loonie. The aussie-yen and the loonie-yen pairs were worth 77.12 and 85.29, respectively at yesterday's close.
During early deals on Friday, the yen plunged to 62.12 against the NZ dollar. This may be compared to yesterday's close of 61.55. If the yen slides further, it may find support around the 63.2 level.
The Canadian retail sales report for April is expected at 8:30 am ET today.
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