2009.08.2000:44:00UTC+00Yen Extends Downtrend On Stock Market Rally

Extending yesterday's New York session downtrend, the Japanese yen slumped against other major currencies during Thursday's early Asian trading as investors opted for higher-yielding assets.

A surge in equities exerted downward pressure on the yen. Usually, there is an inverse relationship between yen and stocks. When there is a stock market surge, yen falls and vice-versa.

The benchmark Nikkei 225 index, which rose to 10,255.8 this morning but dropped down to 10,210 subsequently, is currently trading at 10,272, up 68 points, or 0.67%, over its previous close.

The Japanese unit weakened in early dealings versus the euro,weakening to 134.40. If the yen slides further, 136.48 is seen as the next likely target level. At Wednesday's New York session close, the euro-yen pair was quoted at 133.83.

Thursday in Asia, the yen continued to move lower versus the sterling. The yen hit as low as 156.20 against the pound, which may be compared to yesterday's closing value of 155.53. The next downside target for the Japanese currency is seen around the 157.5 level.

The yen plunged to 94.42 against the US dollar in early deals on Thursday. On the downside, the Japanese currency may likely target the 95.3 level against the buck. The dollar-yen pair closed yesterday's New York session at 94.09.

From U.S., the Labor Department is due to release its customary weekly jobless claims report for the week ended August 15th at 8:30 am ET. Economists estimate claims to have eased to 553,000 in the week.

At 10:00 am ET, the Conference Board is scheduled to release a report on the U.S. leading index for July. The consensus estimate calls for a 0.6% increase in the leading indicators index for the month.at the same time, the results of the Philadelphia Federal Reserve's manufacturing survey are also due out. Economists expect the diffusion index of current activity to show a reading of -2 for August.

The Japanese yen weakened against its Swiss counterpart during Asian trading on Thursday. At about 9:50 pm ET, the yen touched a 2-day low of 88.61 versus the franc, compared to 88.28 hit late Wednesday in New York. The next downside target for the yen is seen around the 89.2 level.

In the European session, the Swiss trade balance, UK July retail sales and Swiss August ZEW surver expectations reports are anticipated.

The yen also weakened against commodity related currencies during early trading. The yen declined to 78.51 against the Aussie and 63.88 against the NZ dollar, with immediate support levels seen around 80.8 and 65.3, respectively. The yen was worth 77.99 against the Aussie and 63.45 against the kiwi at yesterday's close.

Against the Canadian currency, the yen hit a low of 86.26 by about 9:55 pm ET, and if it falls further, it may find support around the 87.9 level. The loonie-yen pair closed yesterday's deals at 85.93.

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