Yen tumbles to 4-1/2 year low vs usd: May 13, 2013

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Market Review - 11/05/2013 00:11GMT

Yen tumbles to 4-1/2 year low vs usd

The Japanese yen tumbled to a fresh 4-1/2 year low due to dollar's broad-based strength together with a government report which showed Japanese investors purchased more foreign assets.

The greenback resumed its recent rally against the yen and rose in Asian session as data overnight showed Japanese investors were buying more foreign bonds. Price continued its steady gain in European session and eventually climbed to a fresh 4-1/2 year high at 101.98 in New York morning, however, price pared intra-day gains and retreated to 101.50 at New York midday before stabilising.

A Ministry of Finance report showed investors bought a net 309.9 billion yen ($3.1 billion) of foreign bonds in the five days through May 3, and 204.4 billion yen the previous week.

The single currency traded sideways in Asia and fell below previous day's low at 1.3010 to 1.2978 in European morning. Despite a brief rebound to 1.3016 at New York open, renewed dollar strength pushed price lower and euro dropped to a 1-month low at 1.2935 in New York morning. However, the pair pared intra-day losses and recovered to 1.2994 in New York afternoon before stabilising.

The British pound also traded sideways in Asia before falling to 1.5410 in New York morning. Cable staged a rebound in tandem with euro to 1.5416, however, price met renewed selling interest and tumbled to an intra-day low at 1.5314 in New York afternoon. Later, the pair rebounded to 1.5357 in New York afternoon.

In other news, German FinMin Wolfgang Schaeuble said 'important to remember G20 countries have promised not to improve competitiveness by manipulating currencies; Japan has promised to take cautious approach on currency rates issue; G7 will discuss foreign exchange rates.' BOJ Governor Haruhiko Kuroda said 'fx rates are determined by market; BOJ is not targeting Fx rates in guiding monetary policy; will tell G7 that BOJ's monetary easing in April was for domestic purposes; G7 likely to discuss market moves in general in context of debate on global economy; JGB market has been volatile since BOJ's April easing but gradually stabilizing;

On the data front, U.K. March Non-EU goods trade deficit came in narrower-than-expected at 3.47 bln stg vs forecast of -4.10 bln stg.

Data to be released next week:

Australia home loans, NAB business conditions, business confidence, China industrial production, retail sales, Swiss retail sales, U.S. retail sales and business inventories on Monday.

Japan domestic CGPI, machine tool orders, Germany WPI, CPI, HICP, ZEW current conditions, economic sentiment, U.K. house prices, Italy CPI, HICP, EU industrial production, ZEW economic sentiment, U.S. import price index, export price index and redbook retail sales on Tuesday.

Japan tertiary index, consumer confidence, France GDP, HICP, CPI, Germany GDP, Italy GDP,EU GDP, UK claimant count, ILO unemployment rate, U.S. empire state manufacturing, PPI, industrial production, capacity utilisation and NAHB housing market index on Wednesday.

New Zealand business PMI, Japan GDP, industrial production, capacity utilisation, Italy trade balance, EU CPI, trade balance, U.S. CPI, jobless claims, housing starts, building permits and Philadelphia fed survey on Thursday.

New Zealand consumer confidence, Japan machinery orders, China conference board, Canada CPI, U.S. U. of Michigan consumer confidence and leading indicators on Friday.
 
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