The dollar and yen edged higher against their major opponents on Tuesday morning Asia as a slide in some Asian stocks and a cautious sentiment ahead of the rate decisions from the world’s largest economies propelled risk-averse traders to move into safe-haven currencies.
The yen climbed to a 4-day high against most major currencies and bounced back from its recently hit 4-day lows against its US and Canadian counterparts. The greenback also jumped to multi-day highs against its major rivals.
Japan’s Nikkei Stock Average was up 0.53%, South Korea’s Kospi Composite rose 0.03% and New Zealand’s NZSE 50 index advanced 0.23%, while Taiwan’s weighted average slipped 0.16%, Australia’s All ordinaries index dropped 0.61% and China’s Shanghai composite was down 0.22%.
The yen climbed to a 4-day high of 135.81 against the pound before reversing direction slightly around 10:00 pm ET and this may be compared to 136.25 hit late New York Monday. If the yen strengthens further, it may likely target the 135.50 resistance level.
Retail sales values in the U.K. increased 0.5 percent in July 2010 compared to one year earlier, according to the British Retail Consortium. The BRC also reported today that overall sales increased 2.6 percent. Total sales were up 3.6 percent.
The yen also advanced to a 4-day high of 113.03 against the euro and 81.59 against the Swiss franc before leveling off around 9:15 pm ET. If the yen gains further, likely resistance levels are seen at 112.50 against the common currency and 81.40 versus the alpine unit.
The yen that closed yesterday’s deals at 113.63 against the euro and 81.93 versus the Swiss franc is presently quoted at 113.17 and 81.71, respectively.
Moving away from its recently hit 4-day low, the Japanese yen also rose to as high as 85.69 against the US dollar before leveling off around 9:15 pm ET. The greenback-yen pair that closed yesterday’s deals at 85.95 is presently quoted at 85.82. In near-term, the yen may find resistance around the 85.55 level.
The yen also advanced to a 4-day high of 78.30 against the Australian dollar and 62.20 against the NZ dollar by 9:30 pm ET, compared to yesterday’s closing quotes of 78.80 and 62.68, respectively. On the upside, the Japanese yen may challenge resistance levels at 62.0 against the kiwi and 78.0 versus the aussie.
Rebounding from its recently hit 4-day low of 83.80 against the Canadian dollar, the yen advanced to as high as 83.33 before holding steady around 9:15 pm ET. The loonie-yen pair that finished Monday’s North American deals at 83.72 is presently quoted at 83.45.
The greenback climbed to a 5-day high of 1.5831 against the pound and 1.0518 against the Swiss franc by 9:40 pm ET, compared to yesterday’s closing values of 1.5894 and 1.0496, respectively. On the upside, the US currency may find target levels at 1.57 versus the pound and 1.0550 versus the Swiss franc.
The greenback also advanced to a 4-day high of 1.3181 against the euro around 9:35 pm ET and this may be compared to yesterday’s close of 1.3222. The euro-buck pair is presently worth 1.3183 with 1.3110 seen as the next likely target level.
Looking ahead, the Bank of Japan is scheduled to announce its decision on interest rates at 12:00 am ET. The BoJ is widely expected to keep interest rates on hold at the record low of 0.10 percent, although the central bank may introduce some new measures to combat deflation or deal with the surging yen.
Final numbers of German CPI data for July, French industrial production and UK trade balance-both for June are expected to influence markets in the upcoming European session.
Turning to the North American session, the Federal Reserve’s interest rate decision will be closely watched by the markets. Traders will be looking to the central bank’s commentary and possibly additional quantitative easing action in light of the slowdown in economic recovery.
Data on non-farm productivity and wholesale trade is likely to provide some direction for the markets earlier in the session.