Yen Falls On Risk Appetite

06:24, 24th November 2014

(RTTNews) - The Japanese yen slipped against its major rivals in European deals on Monday, as surprise stimulus from the People Bank of China, and the European Central Bank President Mario Draghi's pledge to stoke inflation with monetary stimulus prompted investors to cut holdings of low-yielding assets.

Draghi on Friday indicated that the central bank may broaden its asset purchases in an effort to boost inflation.

"We will do what we must to raise inflation and inflation expectations as fast as possible, as our price stability mandate requires of us," Draghi said to bankers in Frankfurt.

China's central bank surprised markets on Friday by cutting its benchmark interest rates for the first time since July of 2012. The move was made to combat a slowdown in the world's second-largest economy.

Better-than-expected German Ifo business sentiment index for November also aided sentiment.

Polls by the Nikkei and Yomiuri newspapers showed that Japanese Prime Minister Shinzo Abe's Liberal Democratic Party is having stronger support than the opposition party, the Democratic Party of Japan. The Nikkei survey indicated 35 percent would vote for the LDP, while the Yomiuri revealed 41 percent backing.

Abe dissolved the lower house of Parliament on Friday, paving the way for a general election in December. Abe also postponed a sales-tax increase, which was scheduled to rise to 10 percent next October, due to disappointing economic data.

The yen that ended last week's deals at 117.80 against the greenback slipped to a 4-day low of 118.37. The next possible support for the yen is seen around the 120.00 zone.

The yen reversed from early multi-day highs of 121.05 against the Swiss franc and 145.58 against the euro, dropping to 122.05 and 146.78, respectively. If the yen extends slide, it may find support around 123.00 against the franc and 150.00 against the euro.

The yen edged down to 185.13 against the pound, from an early high of 184.04. On the downside, the yen is likely to find support around the 186.00 mark. At Friday's close, the pair was quoted at 184.42.

The yen fell to 105.28 against the Canadian dollar, moving closer to pierce Friday's more than 6-year low of 105.30. Continuation of the yen's downtrend may see it finding support around the 108.00 level.

Looking ahead, U.S. services PMI for November is due in the New York session.