The Japanese yen spiked higher across the board on Friday morning in Asia on the back of weak Asia-pacific stocks as risk aversion became more robust after President Barack Obama proposed tight new regulations for major banks.
Obama said the proposed rules would close loopholes that allowed firms to trade in risky products without oversight, strengthen capital and liquidity requirements to make the system more stable and ensure that the failure of any single institution will not pose a risk to the financial system as a whole.
Japan’s Nikkei 225 Index is currently losing 196 points or 1.80% to 10,673 and South Korea’s KOSPI is down 22 points to 1,700. Australia’s All Ordinaries Index is presently losing 83 points or 1.72% to 4,766 and Australia’s S&P/ASX 200 Index is presently declining 83 points or 1.71% to 4,745. New Zealand’s NZX All Capital Index is now losing 25 points or 0.78% to 3,216 and New Zealand’s NZX 50 Index is currently down 28 points or 0.88% to 3,197.
The yen jumped to a 5-week high of 89.89 against the US dollar by 6:15 pm ET, up 2.2 percent from yesterday’s 1-week low of 91.89. Thereafter, the greenback-yen pair attempted to reverse its course but gained back momentum shortly. The pair that closed yesterday’s deals at 90.46 is currently quoted at 89.95.
Yesterday, the US Labor Department reported that first time claims for unemployment benefits unexpectedly rose in the week ended January 16th, although the headline figure was significantly impacted by seasonal factors.
Meanwhile, the Federal Reserve Bank of Philadelphia released a report showing a bigger than expected slowdown in the pace of growth in regional manufacturing activity in January, while the Conference Board revealed that its leading economic indicators index rose for the ninth consecutive month in December.
Against the European currency, the yen jumped to near a 9-month high of 126.58 around 6:15 pm ET and this may be compared to Thursday’s New York session closing value of 127.39. If the domestic unit gains further, resistance is likely to be seen around the 125.6 level. The euro-yen pair is presently quoted at 127.24.
The Japanese yen climbed to a 5-week high of 86.25 against the Swiss franc before losing some ground around 6:15 pm ET. The franc-yen pair that closed Thursday’s deals at 86.77 is presently quoted at 86.35.
In the upcoming European session, trading may be influenced by the euro-zone industrial new orders for November and the French business confidence data for January.
Against the UK currency also, the yen rose to a 5-week high of 145.48 during this time and this may be compared to yesterday’s close of 146.51. The yen stabilized thereafter and is currently quoted at 145.5.
The UK retail sales data is expected on Friday. While the retail sales on month are expected to have risen 1.1 percent in December, annual sales are anticipated to edge up 3.0 percent.
The yen spiked higher against the resource-linked currencies too.
The yen advanced to more than a month’s high of 63.82 against the NZ dollar and 85.47 against the Canadian dollar by 8:35 pm ET. The yen that closed yesterday’s trading at 85.98 against the loonie and 64.26 versus the kiwi is currently quoted at 85.6 and 64.08, respectively.
Against the Australian dollar, the yen climbed to a new multi-week high of 80.82 around 8:20 pm ET. If the yen gains further, resistance could be seen around the 79.5 level. The aussie-yen pair that was worth 81.42 at Friday’s close is presently worth 81.02.
The Australian Bureau of Statistics reported today that the nation’s Import Price Index decreased by 4.3 percent compared the preceding quarter.
Looking ahead, Japan will provide its supermarket sales, Tokyo Department Store sales and the Nationwide Department Store Sales data-all for the month of December.
With little first-tier economic data to consider on Friday, attention will likely turn to Wall Street to see whether stocks extend their losses from the previous session.