The US dollar and the Japanese yen spiked higher against their major counterparts as Asian stocks slide on continued concerns over the euro-zone debt worries, prompting traders to seek the safe-haven currencies like the greenback and the yen.
Tracking cues from Wall Street, where stocks suffered another setback on Friday amid concerns over the state of the European economy, Asian stocks slumped today.
Japan’s Nikkei 225 index fell 2%, Hong Kong’s Hang Seng slipped 2.4%, China’s Shangai composite index dropped 2.4%, New Zealand’s NZX 50 index lost 0.3%, South Korea’s Kospi declined 2.5 % and Taiwan’s main index plunged 2.3%. Australia’s S&P 200 index and the All Ordinaries index was 2.6% lower each.
In economic news from Japan, private sector machinery orders added a seasonally adjusted 5.4 percent in March, the Cabinet Office said today and this marked the first increase in three months.
The result fell within a wide band of expectations for the volatile statistic for between a 5.0 and 6.5 percent gain following the upwardly revised 3.8 percent increase in February.
On an annual basis, core machinery orders climbed 1.2 percent, easily beating forecasts for a 0.2 percent gain after plunging 7.1 percent in the previous month.
At the same time, the Bank of Japan said that an index measuring prices for domestic corporate goods was up 0.4 percent to 103.0 in April compared to the previous month. That was slightly above forecasts for a 0.3 percent increase following the 0.2 percent monthly gain in March.
On an annual basis, CGPI eased 0.2 percent, roughly in line with expectations for a 0.3 percent fall after the 1.3 percent decline in the previous month.
The yen climbed to an 11-day high of 131.33 against the pound, 80.47 against the Swiss franc and 112.68 against the euro around 10:25 pm ET, compared to last week’s closing quotes of 134.36, 81.57 and 114.22, respectively. On the upside, the yen may target resistance levels at 129.60 against the pound, 79.10 against the Swiss franc and 112.09 against the euro.
The euro continued its slide as investors fear that recent austerity measures taken by the euro-zone nations to cut deficits would curb a recovery in the euro zone.
Further, reports in Europe surfaced that France threatened to exit the European Union during conversations on the $1 trillion debt rescue hammered out last weekend. Popular opposition to the bailout in Germany and Greece has raised concerns that the European Union may eventually splinter.
dollar, 88.17 against the Canadian dollar and 80.37 against the Australian dollar around 10:20 pm ET and this may be compared to last week’s closing values of 65.35, 89.53 and 81.96, respectively. If the yen strengthens further, resistance levels are seen at 64.0 against the kiwi, 87.80 against the loonie and 80.0 against the aussie.
The service sector in New Zealand posted its sixth straight month of expansion in April, the Business New Zealand Performance of Services Index revealed today, posting a score of 54.1.
The U.S. dollar rose to 1.4254 against the pound around 10:35 pm ET and this set its highest level since the end of March 2009. The pound-dollar pair that closed last week’s deals at 1.4539 is currently quoted at 1.4305. On the upside, the US currency may find resistance around the 1.4090 level.
The average asking price for a home in the United Kingdom was up 0.7 percent on month in May, property Web site Rightmove said today, slowing from the 2.6 percent gain in April. On an annual basis, house prices added 4.3 percent after jumping 6.0 percent in the previous month.
The US dollar advanced to more than a 4-year high of 1.2236 against the euro and a 1-year high of 1.1449 against the Swiss franc by 10:35 pm ET, compared to last week’s closing quotes of 1.2361 and 1.1335, respectively. If the greenback gains further, resistance levels are likely to be seen at 1.20 against the common currency and 1.1720 versus the alpine unit.
Looking ahead, Japan is set to release its April numbers of Tokyo Condominium sales shortly.
There are no major market moving economic reports due out in the European session.
From the U.S., empire manufacturing survey results and the NAHB housing market index-both for May and the net long-term TIC flows data for March are expected in the North American session.