News Column

Yen Drops Against Majors

June 2, 2014

OTTAWA (Alliance News) - The yen weakened against the other major currencies in the Asian session on Monday as regional stocks advanced due to better-than-expected China manufacturing data released on Sunday. The Japan'sNikkei 225 Index is currently up 303.54 points or 2.07% at 14,936.

Showing signs of a stabilizing economy, China's manufacturing sector growth accelerated in May to its highest level this year, data from the National Bureau of Statistics and the China Federation of Logistics and Purchasing showed Sunday.

China's purchasing managers' index for May improved to 50.8 from 50.4 in April, showing signs of a pickup in the manufacturing sector and the economy - the third consecutive monthly growth.

Meanwhile, Japan's manufacturing output declined for the second consecutive month in May, though at a slower rate, a report by Markit Economics showed. The manufacturing purchasing manager's index came in at 49.9 in May, following the 49.4 figure in April.

According to the report, though the headline index is below the 50-mark that separates expansion and contraction, a broad stabilisation in business conditions in the manufacturing sector was seen in May.

Capital spending in Japan climbed 7.1% on quarter in the first three months of 2014, the Ministry of Finance said - topping forecasts for an increase of 5.8% following the 4.0% gain in Q4.

The yen slipped to 94.08 against the Canadian dollar dollar for the first time since April 7. This may be compared to an early high of 93.81. The yen may possibly find support around the 95.10 zone.

The yen fell to 6-day lows of 139.11 against the euro, 113.93 against the Swiss franc and 102.07 against the US ollar, from early highs of 138.65, 113.60 and 101.74, respectively . The next possible downside target for the yen is seen at 139.51 against the euro, 114.66 against the franc and 102.97 against the greenback.

Reversing from early highs of 86.30 against the NZ dollar and 170.43against the pound, the yen dropped to 5-day lows of 86.56 and 170.96, respectively. If the yen extends its decline, it is likely to find support around 87.48 against the kiwi and 171.10 against the greenback. At 3:00 am ET, Federal Reserve Bank of Chicago President Charles Evans is scheduled to give a lecture on current economic conditions and monetary policy at a workshop in Istanbul.

PMIs from major European economies, UK mortgage approvals and Net Consumer Credit data for April are due in the European session.

ECB Supervisory Board Chair Daniele Nouy is scheduled to speak at 7:45 am ET in Munich.

German preliminary CPI for May is set for release at 8:00 am ET.

At 8:40am ET, US Treasury Secretary Jacob Lew will deliver remarks at a symposium co-hosted by the Treasury Department and the Center for Strategic and International Studies in Washington, D.C.

Markit's final US manufacturing PMI for May, US construction spending for April and ISM manufacturing for May are slated for release in the New York session.

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Source: Alliance News

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