During early European deals on Thursday, the yen extended its Asian session's uptrend against other major currencies as a drop in global stock prices prompted investors to reduce holdings of higher-yielding assets funded in Japan. The yen jumped to new multi-week highs against the euro and the franc, 6-day high against the dollar and a 2-day high against the yen.
Tokyo stocks fell today, their first pullback after a seven-session rally, as Wall Street's decline triggered profit taking, particularly in technology and real estate sectors. The Nikkei 225 Stock Average fell 362.82 points, or 3.9%, to 8876.42. The Topix index of all the Tokyo Stock Exchange First Section issues fell 27.36 points, or 3.1%, to 860.89.
The Bank of Japan Governor Masaaki Shirakawa said today that the central bank could still do more despite low interest rate. Shirakawa said BoJ would focus to stabilize the financial market.
Shirakawa noted that there was slight improvement in the issuance market after the central bank announced its decision to buy commercial papers.
On December 19, the central bank lowered the base rate by 20 basis points to 0.10%. The board also decided to increase its monthly government bond purchases. Early December, the BoJ announced new money market operation measures to facilitate corporate financing.
Policymaker Hidetoshi Kamezaki said in a speech on December that the central bank would concentrate every effort to ensure financial market stability. He said a central bank taking on credit risk was a very extraordinary measure.
The yen reversed direction against the dollar after dropping to 92.93 by about 7:30 pm ET Wednesday. The dollar-yen pair that closed yesterday's trading at 92.63 reached 91.57 at 3:15 am ET Thursday. This set a 6-day high for the yen. If the Japanese currency moves up further, it may likely target the 90.2 level.
During early deals on Thursday, the yen rose to a 17-day high of 124.13 against the European currency. This may be compared to Wednesday's close of 126.43. On the upside, 123.7 is seen as the next target level for the yen.
German exports declined at a faster pace of 10.6% month-on-month in November after falling only 0.6% in October, the Federal Statistical Office reported. Compared to the previous year, exports slumped 11.8% following an increase of 1.3% in the preceding month. On the other hand, imports dropped 5.6% on a monthly basis. This follows a 3.7% fall in October. Year-on-year, imports declined 0.9% after rising 5.2%. The foreign trade balance showed a surplus of EUR 9.7 billion in November, narrowing from EUR 19.4 billion surplus in the previous year.
The yen, which closed yesterday's trading at 139.97 against the pound climbed to a 2-day high of 137.37 in early deals on Thursday. The next upside target level for the Japanese currency is seen at 135.7.
In early trading on Thursday, the yen advanced against the franc hit a 16-day high of 82.97 at 2:55 am ET. If the yen gains further, it is likely to target the 80.3 level. The franc-yen pair was worth 84.16 at Wednesday's North American session close.
Switzerland's State Secretariat for Economic Affairs or SECO said the unadjusted jobless rate rose to 3% in December from 2.7% recorded in November. The rate of unemployment exceeded the consensus forecast of 2.9%. Similarly, the seasonally adjusted unemployment rate edged up to 2.8% from 2.7%. That was in line with the consensus forecast.
Swiss consumer price annual inflation slowed to 0.7% in December from 1.5% in November, the Federal Statistical Office reported. A year ago, the rate was 2%. Economists were expecting an annual 0.9% inflation. Compared to previous month, consumer prices were down 0.5% in December, in line with expectations.
The Euro-zone final third quarter GDP, unemployment rate for November and the consumer confidence report for December are expected shortly.
Across the Atlantic, the US weekly jobless claims report is due in the New York morning. The Federal Reserve is expected to release its monthly consumer credit report at 3 pm ET. Consumer credit for November is likely to show an increase of $0.5 billion. In October, consumer credit fell by $3.6 billion or 1.6% to $2.58 trillion, with revolving and non-revolving credit declining by $0.2 billion and $3.4 billion, respectively.
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