Japanese Yen Soars To New Multi-day Highs Against Majors
Wednesday, the Japanese yen climbed to new multi-day highs against its major counterparts as a fall in the global stock market prompted investors toward the safe-haven yen.
The dollar and the yen are viewed as safe-haven currencies and both currencies gain, when investors turn risk averse and fall when risk appetite improves.
Global stock markets dropped today as more signs American consumers were struggling undermined hopes for a stronger turnaround in the world’s largest economy.
Major Asian markets fell by about 1.5 percent or more, with European shares shedding about 1 percent in early trade. Oil prices dropped below $79 a barrel, while the dollar weakened against the yen.
The losses followed another lackluster session on Wall Street, where an unexpected drop in U.S. consumer confidence gave investors few reasons to wade deeper into a market. It also dampened some of the confidence gained after a string of positive company earnings reports.
The U.S. consumer confidence index fell to 47.7 in October from a revised 53.4 in September, falling well short of the 53.5 expected by economists. The reading was also notably lower than the 53.1 originally reported for the previous month.
In Japan, the benchmark Nikkei 225 index lost 137.41 points, or 1.4 percent, to 10,075.055. Hong Kong’s main index retreated 408.01, or 1.8 percent, to 21,761.58.
Elsewhere, South Korea’s Kospi dived 2.4 percent, to 1,609.71, leading the declines in Asia. Australia’s market fell 1.4 percent, Taiwan’s market lost 1.6 percent and India’s Sensex benchmark fell 0.6 percent.
China’s Shanghai index recouped its losses to close up 0.3 percent.
As trading opened in Europe today, Britain’s FTSE 100 fell 1.1 percent, Germany’s DAX was off 0.8 percent and France’s CAC-40 shed 1 percent.
Against the US dollar, the Japanese yen extended its Asian session gains during early European deals on Wednesday. At 3:40 am ET, the yen reached a 6-day high of 91.09 against the dollar, compared to 91.81 hit late New York Tuesday. The next upside target level for the yen is seen around 90.4.
The Japanese unit that closed Tuesday’s North American session at 135.89 against the European currency climbed to 134.86 at 1:25 am ET Wednesday. This set a 9-day high for the yen. The euro-yen pair is currently trading at 135.10 with 134.4 seen as the next target level.
Italian manufacturers’ confidence rose more than expected in October, while retailers’ and service providers’ sentiment deteriorated.
Manufacturers’ confidence indicator rose to 77.1 in October from a revised 74.3 in September, economic think tank ISAE said today. Economists had forecast an increase to 75. According to the think tank, all sub-indicators of the manufacturing sentiment index showed improvement in October.
Against the British pound, the Japanese currency traded higher during Wednesday’s early deals. At 12:15 am ET, the yen rose to a 1-week high of 148.99 against the pound, compared to Tuesday’s closing value of 150.30. If the yen gains further, 145.8 is seen as the next target level.
The yen that closed Tuesday’s New York deals at 89.86 against the Swiss franc hit an 8-day high of 89.20 at 1:25 am ET Wednesday. On the upside, 88.6 is seen as the next target level for the Japanese yen.
The Japanese yen also edged higher against its Australian, Canadian and New Zealand counterparts during today’s early deals.
The yen advanced to a 13-day high of 82.34 against the Australian dollar and traded near a 3-week high of 84.69 versus the Canadian dollar during Wednesday’s early deals. The next upside target level for the Japanese currency is seen around 80.0 against the aussie and 84.2 versus the loonie. The yen closed Tuesday’s New York deals at 84.17 and 86.26 respectively.
Australia’s consumer prices rose at a slower yearly pace in the three months ended September, the Australian Bureau of Statistics said today. However, on a quarterly basis, consumer prices climbed at a faster pace than in the previous quarter.
The consumer price index climbed 1.3% year-on-year in the third quarter, slower than the 1.5% rise in the second quarter, but came in slightly above economists’ expectations for a 1.2% increase. This marks the slowest annual gain in consumer prices since the second quarter of 1999.
On a quarterly basis, consumer prices were up 1% in the third quarter, faster than the 0.5% rise in the previous quarter and slightly above expectations for a 0.9% increase.
Against the New Zealand dollar, the Japanese currency edged higher to a 13-day high of 66.78 at 5:20 am ET Wednesday. If the yen gains further, 65.1 is seen as the next target level. The kiwi-yen pair closed yesterday’s deals at 68.35.
New Zealand’s business confidence dipped slightly in October after reaching a ten-year high in September.
The latest survey from the National Bank showed today that a net 48.2% firms expect general business conditions to improve in the next 12 months, lower than a net 49% in September. Confidence levels improved in the construction sector, but dropped across the manufacturing, services and retail sectors.
From the U.S., the durable goods orders and the new home sales report-both for the month September are expected in the New York session.
Investors are also treading cautious path ahead of slew of earnings and economic reports due for release during the course of the week.
