Japanese Yen Rises on Risk Aversion as Stock Markets Plunge

The Japanese yen rose across the board yesterday on the back of theselloff in global stock markets as optimism over the earlier news of alarger Chinese stimulus package dimmed and ECB President Jean-ClaudeTrichet said in his press conference that for growth in the eurozone islikely to remain weak for the rest of the year.  
  
Dollardeclined against the yen from 99.69 to 97.72 and the Japanese currencyrebounded against the euro and sterling from 125.75 to 122.70 and from141.50 to 138.06 respectively.  
The Australian dollar weakened to0.6382 on Thursday, giving up some of its gains following the previousday's strong rebound from 0.6285 to 0.6527. The Reserve Bank ofAustralia left rates unchanged on Tuesday, with economists expecting areduction of 25 basis points.  
  
The European Central Bank andBank of England cut interest rates by 50 basis points to 1.50% (recordlow) and 0.50% respectively as widely expected, with Bank of EnglandGovernor Mervyn King announcing quantitative easing measures in orderto increase liquidity in the credit markets. The euro and sterlingdeclined against the dollar to 1.3482 and 1.4037 respectively beforerecovering in New York trading due to short-covering.  
  
Equitymarkets were unable to hold on to Wednesday's gains and declined onThursday as investors were also nervous ahead of the release of theclosely-watched U.S. non-farm payrolls report (to be released on Fridayat 13:30GMT). The Dow fell 281 points and ended the day at 6594 (lowestsince April 1997). Weekly jobless claims eased to 639,000 from anupwardly revised 670,000 while factor orders fell by 1.9% in January(more than the consensus forecast of 1.6%).  
  
U.S. non-farmpayrolls are forecast to have fallen by 648,000 in February compared to598,000 in the previous month, while the unemployment rate is expectedto rise to 7.9% from 7.6%. Other data to be released on Friday includeSwiss CPI and U.K. PPI.