reduced demand for the safe-haven US and Japanese currencies.
Tracking cues from Wall Street, where stocks ended on a strong note overnight on the back of buoyant home sales data, Asian stocks opened higher today.
Japan’s Nikkei 225 index rose 2.6%, Hong Kong’s Hang Seng climbed 1.6%, China’s Shangai composite index soared 0.4%, New Zealand’s NZX 50 index jumped 0.2%, South Korea’s Kospi gained 1.7%, Australia’s S&P 200 index advanced 1.8% and the All Ordinaries index was 1.7% higher.
Japanese services sector activity dropped at the fastest pace in three months, a report by Markit Economics showed today.
The Nomura Purchasing Managers Index (PMI) for services dropped to 47.5 in May from 50.2 in the previous month. However, the rate of contraction was slower than the historical average for the series.
The yen fell to new multi-week lows of 80.27 against the Swiss franc and 135.66 against the pound during early Asian deals on Thursday at 9:30 pm ET. If the yen weakens further, it may likely target 85.5 against the franc and 140.6 against the pound. The yen is currently worth 135.45 against the pound and 80.10 against the franc, compared to Wednesday’s close of 135.05 and 79.85, respectively.
Political uncertainty was also playing a role in the yen’s sharp slide this week. Japanese Prime Minister Yukio Hatoyama resigned yesterday.
Hatoyama’s resignation comes amid plunging public support for his Cabinet, and after the Social Democratic Party left his ruling coalition due to discord over the issue of relocating a U.S. military base in Okinawa.
During early Asian deals on Thursday, the yen slipped against the euro and hit a 6-day low of 113.59 at 9:35 pm ET. On the downside, 114.1 is seen as the next target level for the Japanese currency. The euro-yen pair that closed yesterday’s trading at 112.85 is currently worth 113.34.
The yen extended its yesterday’s New York session choppy trend against the US dollar in early Asian deals on Thursday. The dollar-yen pair bounced between 92.05 and 92.30. The pair that closed yesterday’s trading at 92.15 is currently worth 92.21. The next upside and downside target levels for the pair are seen at 93.0 and 89.3, respectively.
In early Asian deals on Thursday, the yen declined to more than 2-week lows of 78.21 against the Australian dollar, 88.95 against the Canadian dollar and 63.29 against the New Zealand dollar. If the yen falls further, it may target 84.6 against the aussie, 92.6 against the loonie and 68.2 against the kiwi. As of now, the yen is worth 77.90 against the aussie, 88.83 against the loonie and 63.09 against the kiwi, compared to yesterday’s close of 77.63, 88.76 and 62.85, respectively.
The US dollar also declined against the European majors in early Asian deals on Thursday. The dollar plunged to a 2-day low of 1.2308 against the euro and 1.1503 against the franc, compared to yesterday’s close of 1.2255 and 1.1549, respectively. The next downside target level for the dollar is seen at 1.235 against the euro and 1.147 against the franc.
The pound-dollar pair that closed yesterday’s trading at 1.4655 is currently worth 1.4684. On the downside, 1.477 is seen as the next target level for the US currency.
The Euro-zone retail sales for April and the services PMI reports from the major European economies for May are expected in the upcoming European session.
The US ADP employment data for May, weekly jobless claims report for the week ended May 29, final non-farm productivity report for the first quarter, factory goods orders data for April and the ISM non-manufacturing composite index for May have been slated for release in the New York session.