RTTNews - Monday in Asia, the yen plunged against its major counterparts, as growing optimism the global economy is recovering from recession eased demand for the safe-haven currencies.
The yen fell to a 5-day low against the dollar and the pound, 11-day low against the franc and 10-day lows against the aussie, kiwi, loonie and the euro.
Asian stocks soared today and oil prices increased on the back of better-than-expected existing U.S. home sales data and upbeat comments from Federal Reserve chief Ben Bernanke.
Existing home sales in U.S. increased by much more than expected in the month of July, according to a report released by the National Association of Realtors on Friday, with home sales rising for the fourth consecutive month. This signaled the housing crisis that crippled the world's largest economy may be easing.
The report showed that existing home sales rose 7.2 percent to an annual rate of 5.24 million units in July from a 4.89 million-unit rate in June. Economists had been expecting a more modest increase to a 5.0 million-unit rate.
Traders also looked to comments from Federal Reserve Chairman Ben Bernanke, who said on Friday that economic activity appears to be leveling out, both in the United States and abroad, while adding that prospects for a return to growth in the near term appear good.
However, Bernanke warned that the recovery might be sluggish at first, with unemployment declining only gradually from high levels.
Japan's Nikkei 225 rose 3.1% while Australia's S&P/ASX 200 was up 2.7% and South Korea's Kospi Composite gained 1.6%. Taiwan stocks were up 2.7%, Hong Kong's Hang Seng index advanced 1.9% and New Zealand's NZX-50 was up 1.0%.
In early Asian deals on Monday, the yen plummeted to a 10-day low of 79.73 against the Aussie and 65.17 against the kiwi as optimism about the global economy prompted investors to increase bets on currencies linked to global growth and higher yields, such as the Australian and the New Zealand dollars.
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.
If the yen falls further, it may likely target 81.4 against the aussie and 65.6 against the kiwi. The aussie-yen and the kiwi-yen pairs were worth 78.82 and 64.64, respectively at last week's close.
The yen declined to a 10-day low of 87.99 against the Canadian dollar during early Asian deals on Monday as a gain in oil prices supported the loonie. The next downside target level for the yen is seen at 89.2. The loonie-yen pair closed Friday's trading at 87.22.
Crude oil traded near a 10-month high on speculation demand for the fuel will increase as the global economy emerges from the deepest recession since World War II.
U.S. crude for October delivery rose 38 cents to $74.47 a barrel at 10:38 pm ET. London Brent crude gained 38 cents to $74.57 a barrel.
Oil rose $6.38, or nearly 10 percent last week, thanks to a combination of positive economic data, a Wall Street rally and a weak U.S. dollar.
During early Asian deals on Monday, the yen slipped to a 10-day low of 136.11 against the euro. This may be compared to Friday's close of 135.29. On the downside, 137.9 is seen as the next target level for the Japanese currency.
The euro advanced as the European Central Bank officials led by President Jean-Claude Trichet greeted mounting evidence of an economic recovery with caution, suggesting they won't rush to reverse their emergency stimulus.
We see some signs confirming that the real economy is starting to get out of the period of freefall, Trichet said at the Federal Reserve's annual symposium in Jackson Hole, Wyoming, on August 22. This does not mean at all that we do not have a very bumpy road ahead of us.
The Frankfurt-based ECB has fought the financial crisis and economic slowdown by cutting its benchmark interest rate to a record low of 1 percent and beginning a 60 billion-euro ($86 billion) program of buying assets.
The euro-yen pair has appreciated 3% since it touched a 1-month low of 132.20 last Wednesday.
The yen that closed last week's trading at 89.32 against the Swiss franc dropped to an 11-day low of 89.63 in early Asian deals on Monday. If the yen moves down further, it may find support around the 90.2 level.
The franc that tumbled to a 3-week low of 87.21 against the yen last Wednesday bounced back on Thursday after reports showed that Switzerland's trade surplus increased in July and the economic expectations have improved in August. Thus far, the franc-yen pair has gained 3%.
During early Asian deals on Monday, the yen fell to a 5-day low of 156.85 against the pound, down 2% from a 4-day high of 153.62 hit on Friday. If the Japanese currency slides further, it may likely target the 157.6 level.
The yen slipped to a 5-day low of 94.91 against the U.S. dollar in early Asian trading on Monday. The next downside target level for the yen is seen at 95.3.
After hitting an 8-week low of 97.8 on August 07, the yen gained more than 4% against the dollar and reached a 1-month high of 93.44 on August 21 as the Japanese economy pulled out of its worst recession since World War II in the second quarter on government stimulus measures and strong exports.
But the yen pared its gains on Friday after a surprise rise in U.S. home sales and upbeat comments from Federal Reserve chief Ben Bernanke. Thus far, the yen lost 1.5% against the dollar from a 1-month high hit on Friday.
The global economy may be coming out of the worst recession since World War II as record-low interest rates and trillions of dollars in fiscal stimulus spur demand.
The U.S. housing market, which led the way into the recession, is showing signs of improvement. The 7.2 percent rise in sales of existing homes last month was the biggest since the National Association of Realtors began keeping records in 1999.
German investors are also upbeat. Their confidence jumped to its highest level in more than three years in August, the Mannheim, Germany-based ZEW Center for European Economic Research said on August 18.
Japan's economy is also being boosted by government measures ahead of an election. Prime Minister Taro Aso, whose party is trailing in opinion polls before the August 30 parliamentary elections, has put forward a 25 trillion yen ($265 billion) stimulus plan.
The 3.7 percent rise in Japanese gross domestic product in the second quarter followed an 11.7 percent contraction in the first three months of the year. Exports led the revival of the world's second-largest economy last quarter, jumping by 6.3 percent.
The Euro-zone industrial new orders report for June has been slated for release in the upcoming European session.
From Canada, the retail sales report for June is due for release at 8:30 am ET.
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