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Yen Slides As Japan Cabinet Approves Stimulus Package

22:37, 29th November 2012

(RTTNews) - The Japanese yen fell across the board on Friday morning in Asia as the Japanese cabinet approved JPY 880 billion economic stimulus package.

The new spending package, which is more than double the government stimulus of JPY 422.6 billion announced in October, is aimed to focus growth in sectors like health care, agriculture and public work projects.

Meanwhile, the yen was little affected by a slew of economic data released in the morning.

The unemployment rate in Japan was a seasonally adjusted 4.2 percent in October, in line with expectations and unchanged from the previous month.

Average household spending in Japan was down 0.1 percent on year in October, standing at 284,238 yen. That beat forecasts for a decline of 0.8 percent following the 0.9 percent contraction in September.

Industrial output in Japan added a seasonally adjusted 1.8 percent on month in October, the Trade Ministry said in Friday's preliminary reading. That beat expectations for a decline of 2.0 percent following the 4.1 percent decline in September.

On a yearly basis, industrial production dipped 4.3 percent - also beating forecasts for a fall of 8.0 percent after shedding 8.1 percent in the previous month.

Core consumer prices in Japan were unchanged on an annual basis in October, beating forecasts for a 0.1 percent contraction, which would have been unchanged from the September reading.

Overall nationwide consumer prices were down 0.4 percent on year, in line with forecasts following the 0.3 percent decline in the previous month.

On a monthly basis, both overall and core CPI were unchanged.

The yen has been trading mostly lower for the past couple of weeks after the Japanese opposition leader Shinzo Abe, who is also considered the next likely prime minister of the nation, called for unlimited monetary easing.

Asian stock markets are positive today as some better than expected economic data from the United States and Europe supported risk-sentiment, although the gains may be capped by concerns over a lack of progress in the fiscal cliff negotiations.

The yen reached 89.14 against the Swiss franc and 107.32 against the euro, its weakest levels since April 27 and down from Thursday's North American session closing values of 88.57 and 106.60, respectively. On the downside, the yen may find target levels at 89.50 against the Swiss franc and 107.70 against the euro.

The Japanese currency slipped to 132.49 against the pound, its lowest level since April 2 and down by more than 0.5 percent from Thursday's North American session closing value of 131.75. If the yen weakens further, 133.30 is seen as the next likely support level.

Consumer confidence in the United Kingdom rose in the month of October, according to survey results released Friday by the GfK NOP firm. The GfK index rose to a reading of minus-22 from an October reading of minus-30.

The yen slipped to a 4-day low of 82.56 against the US dollar, down from yesterday's close of 82.13. The yen is expected to cross last week's 82.85 support against the dollar as the recent uptrend seemed a correction in the daily chart.

The U.S. Commerce Department on Thursday reported an upward revision Q3 GDP, which now added 2.7 percent compared to the 2.0 percent growth previously reported. The growth reflected upward revisions to private inventory investment and exports, although there was also a downward revision to the pace of consumer spending growth.

A separate report from the Labor Department showed a modest drop by weekly jobless claims, while the National Association of Realtors also reported a much bigger than expected jump by pending home sales in October.

The Japanese currency also lost ground against the resource-linked units, falling to 4-day lows of 83.15 against the Canadian dollar and 67.93 against the NZ dollar. The yen also slipped to a session's low of 86.05 against the Australian dollar. The next downside target levels for the Japanese unit are seen at 83.30 against the loonie, 68.15 against the kiwi and 86.15 against the aussie.

Looking ahead, Japan housing starts, construction orders and vehicle production-all for the month of October are expected later in the session.

German retail sales for October, Swiss KOF leading indicator for November, eurozone jobless rate for October and consumer price index for November are expected to influence trading in the European session.

Canada third quarter GDP, the U.S. personal income and outlays data for October and the Chicago PMI for November are the key data to watch in the North American session.

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