Yen gains broadly on renewed weakness in the Nikkei futures after decline in U.S. stocks
The Japanese yen strengthened again against other currencies on Friday as the selloff in Japanese Nikkei futures in New York session prompted investors to unwind their previous massive short positions in yen.
Earlier in Asia, although dollar yen fell sharply from Australian high at 95.81 to 94.43 at Asian open as Japan's Nikkei-225 index pared some of early over 400 points gains, price staged a recovery to 95.37 and then traded narrowly in European session.
Later, despite dollar's brief rise to 95.33 in New York morning, price fell sharply after the release of weaker-than-expected U.S. University of Michigan consumer confidence (82.7 versus the forecast of 84.5) and later hit session a low of 93.98 at U.S. midday due to the selloff in Japan's Nikkei futures caused by weakness in the Dow.
The single currency fell sharply from Thursday's New York high at 1.3380 to 1.3342 in Asian morning. Price weakened further in European session due to cross selling of euro versus sterling and hit session low of 1.3295 in New York morning after the release of U.S. PPI and current account. Later, although the pair recovered to 1.3350 on weaker-than-expected U.S. consumer confidence, cross selling of euro versus yen briefly pressured euro to 1.3313 at U.S. midday and euro edged back to 1.3350 and traded near 1.3344 near New York close.
U.S. PPI in May came in at 0.5% m/m n 1.7% y/y, higher than the forecast of 0.1% and 1.4% respectively. U.S. current account was released at -106.1B, versus the forecast of -109.7B and the previous revised -102.3B.
The British pound went through a volatile roller-coaster session in Friday's session. Although cable edged lower from Australian top at 1.5725 in Asia and fell sharply to 1.5616 in European morning due to cross selling of sterling versus euro, the pair rebounded strongly in tandem with euro, intra-day upmove continued for rest of New York session and price closed just below New York high at 1.5714.
In other news, IMF chief Christine Lagarde said 'assumes Fed will slightly reduce asset purchases next year.' IMF said 'U.S. deficit reduction this "excessively rapid and ill-designed." urges repeal of sequester; U.S. economy should expand 2.7% in 2014, below it April forecast 3%; risks to U.S. outlook titled to downside due to uncertainties over austerity, long-term damage to labour market and external environment.' BOE's McCafferty says 'not sensible to tighten monetary policy if fall in sterling reflects need for economic rebalancing; most recent data suggest modest pick-up in U.K. growth but still risks; current amount of stimulus in UK is appropriate; some of QE put in place last year may still have some impact to come.'
On the data front, Euro zone employment in Q1 came in at -0.5% Q/Q n -1.0% y/y. Euro zone CPI in May came in at 0.1% m/m n 1.4% y/y, same as expectation.
Data to be released next week :
Japan tertiary industry index, U.K. Rightmove house price, Italy trade balance, EU trade balance, labour cost, Canada existing home sales, U.S. Empire State manufacturing on Monday.
Japan industrial production, capacity utilization, machine tool orders, U.K. PPI, CPI, RPI, ONS house price, German ZEW economic sentiment, ZEW current condition, EU ZEW economic sentiment, U.S. housing starts, building permits, retail sales on Tuesday. Fed begins 2-day FOMC meeting.
New Zealand current account, Australia Westpac leading economic indicator, Japan export, import, U.K. BOE MPC vote, Swiss ZEW index, Canada wholesale sales, U.S. rate decision on Wednesday.
New Zealand GDP, Japan leading indicator, China HSBC flash manufacturing PMI, Swiss rate decision, trade balance, German PPI, manufacturing PMI, service PMI, Italy industrial orders, current account, U.K. retail sales, CBI industrial trend, EU manufacturing PMI, service PMI, consumer confidence, U.S. PMI, jobless claim, existing home sales, leading indicator, Philadelphia Fed Survey on Thursday.
New Zealand consumer confidence, EU current account, U.K. PSNCR, public sector net borrowing, Canada CPI, retail sales on Friday.