Yen Drops After China Manufacturing PMI Data

In the Asian session on Wednesday, the Japanese yen declined against its key counterparts as traders reduced holding of low yielding assets after a detailed survey report from Markit Economics showed that the pace decline in China's manufacturing activity for April eased more than initially estimated.

The HSBC/Markit purchasing managers' index for the factory sector rose to 49.3 in April from 48.3 in March. The flash report showed a reading of 49.1 for April.

In economic news from Japan, private sector growth eased marginally in April from March's record-high, the latest survey by Markit Economics showed today.

The composite output index, which measures activity in both manufacturing and service sectors, fell to 51.3 in April from March's series record-high of 53.2.

The yen dropped to 2-day lows of 88.51 against the franc, 106.34 against the euro and 130.54 against the pound with 89.00, 107.00 and 131.00 seen as the next downside target levels, respectively.

Against the U.S. dollar, the yen that ended yesterday's deals at 80.10 fell to a 5-day low of 80.42. If the yen falls further, it may target 81.00 level.

The yen edged down to 2-day lows of 65.54 against the NZ dollar and 81.66 against the Canadian dollar, compared to Tuesday's close of 65.32 and 81.27, respectively. On the downside, the yen may target 66.00 against the kiwi and 82.00 against the loonie.

Against the Australian dollar, the yen declined to 83.21 from yesterday's close of 82.77. The next downside target level for the yen is seen at 83.5.

Looking ahead to the European session, Swiss retail sales for March, SVME PMI for April, U.K. mortgage approvals data and Eurozone unemployment rate - both for March, German unemployment data for April and final PMI's for April from major European economies are due for release.

The U.S. ADP employment data for April and factory orders for March are set for release in the early New York session.