The yen extended its losses against major currencies on Tuesday as talk of intervention to weaken the Japanese currency persisted. Japan’s Finance Minister, Taro Aso, followed up yesterday’s warning of intervening in the currency markets by telling the Japanese parliament on Tuesday that it will be “natural to undertake intervention” if the yen continues to strengthen.
The US dollar continued its advance above the 108 yen level in Asian trading today to climb to 108.80 yen in late session. The euro and the pound also benefited from the yen’s sell-off and broke above 124 and 157 yen levels respectively.
Japanese stocks were boosted for a second day by the weaker exchange rate, helping the Nikkei 225 index to close up 2.2%.
In China, consumer prices rose less than expected in April with the CPI index up 2.3% year-on-year versus estimates of 2.4% and unchanged from the previous month. However, producer prices came in stronger than expected in April at an annual rate of -3.4% versus forecasts of -3.8%. Despite the softer-than-expected headline rate, most analysts think China’s central bank is far more likely to lower the reserve requirement ratio than to cut rates.
The yuan was slightly down today in onshore trading at 6.5154 per dollar following a weaker midpoint.
In European markets, the euro was unfazed by mixed German data and edged higher against the dollar in late Asian trading to briefly climb above 1.14 dollars. German exports rose by 1.9% month-on-month in March, beating estimates of no change. However, industrial production data was not as positive as output declined by 1.3% on a monthly basis in March, missing forecasts of a 0.2% drop.
In commodities, oil prices attempted to recoup some of yesterday’s heavy losses when prices tumbled following signs that the wildfires in Canada were moving away from production facilities. However, oil could see some further pressure today ahead of the latest API inventory data from the US. WTI oil futures were last trading up 0.5% at $43.64 a barrel.
The Australian dollar rebounded in line with commodity prices as it rose to 0.7340 against the US dollar in today’s late Asian session. The New Zealand dollar however remained subdued and hit a fresh 6-week low of 0.6732 versus the greenback.
Coming up later today, UK trade data will be the main data during European session, while in the US the latest JOLTS job openings numbers will be eyed.