Tuesday in Asia, the yen soared against other major currencies as a slide in Asian stocks boosted demand for the safe-haven Japanese currency.
The yen climbed to a 4-day high against the pound and the franc and fresh multi-week highs against the rest of majors.
Asian stocks fell today on signs that the global economic recovery is slowing and investors also remained cautious ahead of European debt sales this week.
Japan’s Nikkei 225 index fell 1.4%, Hong Kong’s Hang Seng lost 1.1%, China’s Shangai composite index fell 3.3%, New Zealand’s NZX 50 index slipped 0.6%, South Korea’s Kospi declined 1.5% and Taiwan’s main index plunged 1%. Australia’s S&P 200 index and the All Ordinaries index dropped 0.9% each.
World stock markets plunged this year as investors aggressively removed themselves from risk due to a number of factors such as mounting worries about the euro zone’s fiscal crisis, falling commodity prices and uncertainty about the global economic outlook.
Riskier assets such as the higher-yielding Australian and New Zealand dollars also came under selling pressure, with traders unwinding leveraged carry trades and moving funds to the U.S. dollar, the yen and the Swiss franc, which are considered as safe-haven assets in times of volatility.
Japan’s unemployment rate rose for the third straight month in May, up a seasonally adjusted 0.1 percentage point from April to 5.2%, the Internal Affairs Ministry reported today. This was slightly higher than forecasts for 5%, following the 5.1% rise in April. The number of employed persons eased 0.7% on year to 62.95 million.
Meanwhile, a separate report from the Ministry of Economy, Trade and Industry showed that industrial production in Japan fell a seasonally adjusted 0.1% in May from the previous month. This was below expectations for a flat reading following the 1.3% increase in April.
On an annual basis, industrial output jumped 20.2%, roughly in line with expectations for a 20.3% increase following the 25.9% spike in the previous month.
The yen rose against the euro in Asian deals on Tuesday. The euro-yen pair that closed yesterday’s trading at 109.72 reached 108.63 at 1:10 am ET. This set the highest level for the Japanese currency since June 08. If the yen advances further, it may likely target the 108.1 level. As of now, the pair is worth 108.76.
The yen gained 19% against the euro this year and reached more than an 8- 1/2 -year high of 108.10 on June 07, as Greek woes continued to haunt the euro. Although the yen lost 5% thereafter, it rebounded after falling to near a 3-week low of 113.43 on June 21.
The yen strengthened against the US dollar in Asian deals on Tuesday. The yen is currently trading near an 8-week high of 88.70 per dollar with 88.0 seen as the next upside target level. The dollar-yen pair closed yesterday’s trading at 89.36.
The yen has strengthened more than 4% against the dollar since it touched a 17-day low of 92.90 on June 04.
During Asian deals on Tuesday, the yen climbed against the currencies of U.K. and Switzerland. At present, the yen is trading at a 4-day high of 133.80 against the pound and 81.70 against the franc, compared to yesterday’s close of 134.93 and 82.25, respectively. The next upside target level for the yen is seen at 133.1 against the pound and 80.8 against the franc.
The yen that plunged to a 1- 1/2 -month low of 82.58 against the franc and a 1-week low of 135.29 against the pound yesterday has advanced 1% each thus far.
The yen edged up against the Canadian dollar in Asian deals on Tuesday. Presently, the yen is trading at more than a 3-week high of 85.30 against the loonie, compared to 86.31 hit late New York Monday. On the upside, 83.0 is seen as the next target level for the Japanese currency.
After hitting a 5-week low of 90.09 on June 21, the yen has appreciated more than 5% against the Canadian dollar.
In Asian deals on Tuesday, the yen soared against its Australian and the New Zealand counterparts. Currently, the yen is trading at a 19-day high of 62.23 against the kiwi and 76.64 against the aussie. If the yen gains further, it may likely target 60.0 against the kiwi and 74.0 against the aussie. The kiwi-yen and the aussie-yen pairs were worth 63.35 and 77.95, respectively at yesterday’s close.
The yen slumped to a 5-week low of 65.36 against the kiwi and 80.89 against the aussie on June 21. But the yen recovered thereafter and has advanced more than 5% against the aussie and the kiwi.
The French consumer confidence index for June, U.K. mortgage approvals data for May and the Euro-zone economic, consumer, business and industrial confidence reports for June are expected in the upcoming European session.
The Canadian industrial product price for May and the U.S. consumer confidence index for June and the S&P/Case-Shiller home price index for April have been slated for release in the North American session.