Extending last week’s downtrend, the Japanese yen declined across the board in early Asian trading on Monday as risk appetite re-emerged in the markets after the news that most European banks passed the stress tests on Friday.
The yen plummeted to more than a 7-week low against the euro and new multi-day lows against the rest of majors.
The Japanese stock market is trading higher today, with the benchmark Nikkei 225 index rose 119.93 points or 1.27% to 9551.11 from its previous close.
On Friday, the Committee of European Banking Supervisors revealed that only seven of the 91 European banks examined for their ability to withstand financial shocks failed the applied stress tests.
The Committee said the assessments were tougher than the ones carried out in the U.S. last year, but reports suggested the test failed to account for the threat of sovereign debt defaults, which many see as a possible worst case scenario for banks.
In economic news, Japan saw a merchandise trade surplus of 687.0 billion yen in June, the Ministry of Finance said today. That was roughly in line with analyst expectations for a surplus of 690.9 billion yen following the revised 320.9 billion yen surplus in May.
By 8:25 pm ET, the yen tumbled to 113.49 against the euro and this set the lowest mark for the domestic unit since June 6. On the downside, the yen may find target around the 114.10 level. The euro-yen pair that finished last week’s deals at 112.89 is presently quoted at 113.27.
The yen plunged to an 11-day low of 87.72 against the US dollar and 84.65 against the Canadian dollar at this time and this may be compared to last week’s closing values of 87.41 and 84.40, respectively. On the downside, the Japanese unit may find support levels at 89.10 against the greenback and 85.0 versus the loonie.
The yen also tumbled to an 11-day low of 135.47 against the pound around 8:00 pm ET and a move below its July 14th low of 135.86 could set its lowest level in 5 weeks. The pound-yen pair that closed last week’s deals at 134.83 is presently quoted at 135.34.
The average asking price for a home in the United Kingdom was down 0.1 percent in July compared to the previous month, property Web site Hometrack said today, falling for the first time in 15 months following the 0.1 percent increase in June.
On an annual basis, prices were up 2.0 percent in July after rising 2.1 percent a month earlier.
The yen reached an 11-day low of 63.96 against the New Zealand dollar around 8:25 pm ET, compared to 63.64 hit late New York Friday. The kiwi-yen pair is presently worth 63.80 with 64.40 seen as the next likely target level.
The yen slumped to a 12-day low of 78.65 against the Australian dollar around 8:05 pm ET and a move below the 78.90 support could set its weakest level in more than a month. The aussie-yen pair that was worth 78.39 at Friday’s close is currently quoted at 78.53.
Looking ahead, Australia will release producer price index numbers for the second quarter of 2010 at 9:30 pm ET, with analysts expecting a rise of 0.8 percent on quarter following the 1 percent gain in the previous three months.
There are no major economic reports due out today in the European session.
Turning to the North American session, the U.S. Census Bureau will release the new home sales data for June at 10:00 am ET.