News Column

Yen Strengthens On Risk Aversion

July 7, 2014

CANBERA (Alliance News) - The Japanese yen climbed against its key counterparts in European deals on Monday, as European stocks fell after German industrial production declined unexpectedly in May, casting doubt over growth of Europe's largest economy.

German industrial production declined unexpectedly in May and at the sharpest pace since April 2012 as geopolitical risks weighed on business confidence and demand.

Industrial output fell 1.8% in May from the prior month, Destatis reported. This was the third consecutive fall and the biggest since April 2012, when output dropped by 2%.

International Monetary Fund Managing Director Christine Lagarde indicated a slight reduction to the institution's global growth outlook as investment remains subdued.

The global economic outlook to be released later this month would be "slightly different" from previous forecasts, Lagarde said at the Cercle des Economists conference in Aix-en-Provence, France on Sunday.

Japan's leading index declined for the fourth consecutive month in May, preliminary data from the Cabinet Office showed.

The leading index fell more-than-expected to 105.7 in May, the lowest score since February 2013, from 106.5 in April. The expected reading was 105.9.

The yen advanced to a 4-day high of 101.81 against the greenback and a 5-day high of 174.26 against the pound, off its prior lows of 102.19 and 175.24,respectively. On the upside, the yen may find resistance around 101.00 against the greenback and 173.00 against the pound.

The yen reversed from early lows of 114.16 against the Swiss franc and 138.82 against the euro and hit 1-week highs of 113.90 and 138.45, respectively. Further extension of bullish trend may take the yen to resistance levels of around 113.00 against the franc and 137.5 against the euro.

The yen hit 95.33 against the aussie, a 4-day high, up from last week's close of 95.53. The yen is likely to find resistance around the 94.5 area.

Although the yen climbed to a 4-day high of 95.66 against the loonie at 8:15 am ET, it reversed in a short while. The pair was quoted at Friday's close of 95.79.

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Source: Alliance News

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