Yen Weakens As Risk Appetite Improves

01:06, 20th August 2014

(RTTNews) - The Japanese yen weakened against the other major currencies in the Asian session on Wednesday as investors sentiment improved on robust U.S. housing data.

The benchmark Nikkei 225 index is currently up 3.00 points or 0.02 percent at 15,452.

Data from the Commerce Department showed on Tuesday that U.S. housing starts rebounded substantially in the month of July after a notable decrease in the previous month.

The report said housing starts jumped 15.7 percent to an annual rate of 1.093 million in July after falling 4 percent to a revised 945,000 in June. Economists had been expecting housing starts to climb to a rate of 963,000 from the 893,000 originally reported for the previous month.

Easing tensions in Ukraine also brightened investor mood.

Ukrainian president Petro Poroshenko and Russian president Vladimir Putin will meet on August 26 in the Belarusian capital, Minsk, as part of a summit between the Eurasian Customs Union, the EU and Ukraine. The meeting between Putin and Poroshenko will mark their first face-to-face talks since June and could be a key step in resolving the ongoing conflict in eastern Ukraine.

On the economic front, Japan saw a merchandise trade deficit of 963.99 billion yen in July, the Ministry of Finance said on Wednesday. That was bigger than the ecpected deficit of 713.9 billion yen and followed the 823.2 billion yen shortfall in June.

Exports were up 3.9 percent on year - slightly ahead of estimates for an increase of 3.8 percent following the 1.9 percent decline in the previous month. Imports were up an annual 2.3 percent versus forecasts for a decline of 1.7 percent following the 8.4 percent spike a month earlier.

The yen fell to a 4-1/2-month low of 103.22 against the U.S. dollar, from an early high of 102.88. If the yen extends its downtrend, it is likely to find support around the 103.37 area.

Pulling away from early highs of 137.00 against the euro and 113.13 against the Swiss franc, the yen slipped to a 5-day low of 137.32 and a 2-day low of 113.36, respectively. On the downside, 138.00 against the euro and 113.70 against the franc are seen as next support level for the yen.

Against the pound, the yen fell to 171.39 against the pound from an early high of 170.94. The yen may test support near the 172.95 zone.

Looking ahead, Japan all industry activity index for June is due to be released in the Asian session.

In the European session, German producer price index for July is due.

At 4:30 am ET, the Bank of England Monetary Policy Committee will release the minutes of the August.

In the New York session, Canada wholesale sales data for June is due to be released.

At 2:00 pm ET, U.S. Federal Reserve will release the minutes from the July 29-30 Federal Open Market Committee meeting.