INO.com News - Dollar And Yen Soars On Weak Equities (rtt)

Dollar And Yen Soars On Weak Equities

(RTTNews) - Thursday, the dollar and the yen strengthened against their major counterparts as most Asian and European stocks fell, encouraging investors to pare back exposure to risk and buy back the two low-yielders against perceived riskier currencies.

The higher yielding Australian and New Zealand dollars fell sharply as traders took profit from riskier carry trades.

Benchmark interest rates are 3.5% in Australia and 2.5% in New Zealand, compared with 0.1% in Japan and as low as zero in U.S.

Most Asian and European stock markets fell today as signs of weakness in the U.S. economy aggravated worries about the strength of the global recovery.

Earlier in Asia, Japan's Nikkei 225 stock average lost 127.33 points, or 1.3 percent, to 9,549.47 -- its seventh straight day of decline as investors succumbed to jitters about a possible glut of new bank shares after Mitsubishi UFJ announced its capital raising plans. The bank's shares fell 3.7 percent.

Elsewhere, Hong Kong's Hang Seng fell 0.9%, India's key index was down 1.3%, Taiwan's benchmark shed 0.1 percent and Indonesia's market was 0.6 percent lower.

Other markets fared better. South Korea's Kospi added 1 percent to lead the region and China's Shanghai index rose 0.5 percent.

In Europe, Britain's FTSE 100 index lost 0.3%, Germany's DAX fell 0.5% and France's CAC-40 dropped 0.4%.

In economic news, Japan's all industry activity dropped a seasonally adjusted 0.6% month-on-month in September, compared to the 0.9% increase in the previous month, the Ministry of Economy, Trade and Industry reported today. This was the first monthly decline in all industry activity since March 2009, when the index slumped 1.6%. Economists had expected the index to remain flat in September.

On a yearly basis, all industry activity plunged 7.1% in September, faster than the downwardly revised 6.7% decrease in the preceding month.

The yen that closed yesterday's trading at 149.66 against the pound rose to a new multi-week high of 148.0 during early deals on Thursday. The next upside target level for the yen is seen at 146.4.

In early trading on Thursday, the yen climbed to new multi-week highs of 132.08 against the euro and 87.35 against the Swiss franc. If the Japanese currency gains further, it may target 131.7 against the euro and 87.2 against the franc. The euro-yen and the franc-yen pairs were worth 133.69 and 88.51, respectively at yesterday's close.

The Federal Statistical Office of Germany said the number of persons in employment decreased by 0.2% or about 81,000 year-on-year in the third quarter compared to a 0.1% rise in the second quarter. During the quarter, there were 40.4 million employed persons. The statistical office said the third quarter decline in employment was the first since the corresponding period in 2005.

The yen strengthened to a 2-day high of 89.85 against the U.S. dollar in early trading on Thursday. On the upside, 88.75 is seen as the next target level for the Japanese currency. At yesterday's close, the dollar-yen pair was quoted at 89.36.

During early deals on Thursday, the dollar rose to a 6-day high of 1.6645 against the pound. This may be compared to yesterday's close of 1.6747. On the upside, 1.652 is seen as the next target level for the U.S. currency.

UK retail sales rose 0.4% month-on-month in October, the Office for National Statistics said today. Economists had forecast 0.5% rise. In September, retail sales rose 0.4%, upwardly revised from zero growth reported previously.

Compared to the same month of the previous year, retail sales grew 3.4% in October, more than the expected 2.9% growth. The statistical agency revised September's growth to 2.9% from 2.4%.

The dollar climbed to a 2-day high of 1.0198 against the Swiss franc and 1.4845 against the euro in early trading on Thursday. The next upside target level for the dollar is seen at 1.482 against the euro and 1.021 against the franc. The euro-dollar and the dollar-franc pairs were worth 1.4963 and 1.0101, respectively at yesterday's close.

Switzerland's trade surplus in October rose to CHF 2.46 billion from CHF 1.91 billion surplus recorded in September, the Federal Customs Administration said today.

Exports rose 0.1% month-on-month on a seasonally adjusted basis after falling by an upwardly revised 1.9% in September. Meanwhile, growth in imports eased to 0.6% from an upwardly revised 3.2% in the previous month. On an annual basis, exports were down 15.9% and imports plunged 10% in October.

Traders are now likely to focus on the New York session, in which the U.S. weekly jobless claims for the week ended November 14, leading indicators for October and the results of the Philadelphia Federal Reserve's manufacturing survey for November are expected to influence trading.

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