Asian Session – Risk on sentiment hurts yen as stocks gain
January 8, 2014 7:46 am
Stronger risk sentiment drove the yen lower during Asian trading, as the Nikkei rose on the back of strong gains on Wall Street the previous day. The dollar gained 0.30% against the yen to trade at 104.91. The euro was also stronger against the yen as the euro made back some of its recent losses, gaining 0.39% to trade at 142.97. The euro was down 1.40% against the yen so far in the New Year.
The yen has been strong during the first few sessions of 2014, reversing a small part of the big losses it made during 2013. However, trading action in the last 24 hours or so has seen the yen weaken again and this could embolden traders to once more take the yen to fresh lows in the not too distant future.
One reason behind the strong dollar and the market optimism was the announcement of the lower-than-expected US trade deficit for November. The monthly deficit of 34.25 billion dollars was the lowest in four years, as imports fell and exports rose to an all-time record for the largest economy in the world. This latest figure backs up the argument that the US has managed to regain competitiveness and that exports could contribute positively to economic growth, although the external sector traditionally makes up for a smaller part of the US economy compared to other developed countries.
The euro was little changed against the dollar, as it rose 0.09% to trade at 1.3627. The euro was relatively resilient and has so far resisted attempts to drive it below the 1.36 mark. Weaker-than-expected December flash Eurozone inflation at 0.8% the previous day failed to drive the currency lower as the market may be anticipating the ECB chief’s press conference after the bank’s board of governors meets on Thursday. It should be noted that the smaller-than-expected US trade deficit did only short-term damage to euro / dollar, as the pair managed to rebound somewhat after sliding in the aftermath of the release.
One victim of the latest risk on sentiment in the markets was gold, which quickly dropped to as low as 1224 dollars an ounce during the previous day’s US trading compared to 1248 (a three-week high) as recently as Monday’s trading.
The day ahead was looking busy for the markets. During the European Session, traders would get the important Eurozone retail sales and unemployment rate for November. The unemployment rate in October dropped slightly to 12.1% from all-time highs of 12.2% in September and economists are expecting it to stay constant this time round. Later on, the ADP private sector employment figures are expected from the United States, which are sometimes a precursor of the nonfarm payrolls report that is due out on Friday. Finally, late in the US session the market will get a chance to react to the minutes of the latest Fed meeting, when tapering was decided.
Stronger risk sentiment drove the yen lower during Asian trading, as the Nikkei rose on the back of strong gains on Wall Street the previous day. The dollar gained 0.30% against the yen to trade at 104.91. The euro was also stronger against the yen as the euro made back some of its recent losses, gaining 0.39% to trade at 142.97. The euro was down 1.40% against the yen so far in the New Year.
The yen has been strong during the first few sessions of 2014, reversing a small part of the big losses it made during 2013. However, trading action in the last 24 hours or so has seen the yen weaken again and this could embolden traders to once more take the yen to fresh lows in the not too distant future.
One reason behind the strong dollar and the market optimism was the announcement of the lower-than-expected US trade deficit for November. The monthly deficit of 34.25 billion dollars was the lowest in four years, as imports fell and exports rose to an all-time record for the largest economy in the world. This latest figure backs up the argument that the US has managed to regain competitiveness and that exports could contribute positively to economic growth, although the external sector traditionally makes up for a smaller part of the US economy compared to other developed countries.
The euro was little changed against the dollar, as it rose 0.09% to trade at 1.3627. The euro was relatively resilient and has so far resisted attempts to drive it below the 1.36 mark. Weaker-than-expected December flash Eurozone inflation at 0.8% the previous day failed to drive the currency lower as the market may be anticipating the ECB chief’s press conference after the bank’s board of governors meets on Thursday. It should be noted that the smaller-than-expected US trade deficit did only short-term damage to euro / dollar, as the pair managed to rebound somewhat after sliding in the aftermath of the release.
One victim of the latest risk on sentiment in the markets was gold, which quickly dropped to as low as 1224 dollars an ounce during the previous day’s US trading compared to 1248 (a three-week high) as recently as Monday’s trading.
The day ahead was looking busy for the markets. During the European Session, traders would get the important Eurozone retail sales and unemployment rate for November. The unemployment rate in October dropped slightly to 12.1% from all-time highs of 12.2% in September and economists are expecting it to stay constant this time round. Later on, the ADP private sector employment figures are expected from the United States, which are sometimes a precursor of the nonfarm payrolls report that is due out on Friday. Finally, late in the US session the market will get a chance to react to the minutes of the latest Fed meeting, when tapering was decided.
Related Posts: