Yen weaker, high-yielders gain as risk in demand

SYDNEY (BestGrowthStock) – The yen was broadly under pressure on Monday while demand for higher-yielding currencies was robust after a better-than-expected U.S. jobs data supported optimism about an economic recovery.

The yen was also weighed down by speculation that the Bank of Japan would further loosen its already lax monetary policy soon to address deflationary pressure in the economy.

The yen lost ground on the crosses, with the euro jumping to 123.30 yen from 123.03 yen late in New York on Friday when it gained over 1.7 percent. The Aussie also jumped on the yen, rising to as high as 82.32 yen from around 81.85 yen late on Friday.

Low interest rates mean the yen tends to fall when risk appetite rises and as investors borrow the yen to finance more lucrative trades in other currencies and assets.

“Aussie/yen should lift further over the coming week,” said Joseph Capurso, currency strategist at Commonwealth Bank. “Deflationary pressures are concerning officials in Japan and a further reduction in interest rates or new alternative measures cannot be ruled out.”

The euro was higher on the U.S. dollar, edging up to $1.3635 from $1.3611 late in New York, helped at the margins by growing support for debt-laden Greece.

In a bid to calm markets, French President Nicolas Sarkozy promised Greece on Sunday that euro zone countries would help it overcome its financial problems and vowed a crack down on financial speculators Athens blames for its woes. [ID:nLDE6260JZ] Traders say, near term resistance for the euro is seen around $1.3712, its March 4 high.

The dollar index (Read more about the global trade. ) (.DXY: ) was lower at 80.35, with near term support seen around 79.55/60 — its Feb 17 low — with latest data showing currency speculators cutting by more than half their long bets on the U.S. dollar in the week to March 2. (IMM/FX: ).

Traders say the index looks toppish, unless the global economy is slowing or the Federal Reserve is tightening imminently.

The U.S. Labor Department said the economy lost 36,000 jobs in February, leaving the unemployment rate steady at 9.7 percent. Analysts polled by Reuters expected 50,000 job cuts and a 9.8 percent jobless rate.

That data sent U.S. yields higher, although interest rate futures showed bets for a monetary tightening before December was still not heavy.

The Australian dollar was firm at around $0.9095, after breaking resistance at 100-day moving average at $0.9064. The New Zealand dollar was also strong at $0.6991, having jumped around 1.4 percent on Friday.

The Reserve Bank of New Zealand will issue a monetary policy statement on Thursday. It is expected to hold rates at a record low of 2.5 percent with a reiteration of no rise before the middle of the year..

Commodity currencies will eye events in China this week for cues. The Asian powerhouse is likely to hold center stage with the National People’s Congress continuing while a slew of data from trade on Wednesday to industrial output, consumer prices and retail sales are due on Thursday.

Stock Research

(Reporting by Anirban Nag; Editing by Balazs Koranyi)

Yen weaker, high-yielders gain as risk in demand