AceTrader Jun14: Yen rallies due to the sell off in Japanese equities & then falls

[B]Market Review - 13/06/2013 [I]22:22GMT[/I][/B]

[B]Yen rallies due to the sell off in Japanese equities and then falls in New York[/B]

The Japanese yen rose strongly against other currencies on Thursday as the sell off in Japan’s Nikkei index triggered investors to unwind their previous short position of the yen.

Versus the Japanese yen, the greenback fell sharply in Asian morning due to the sell off in Japan’s Nikkei index (down by more than 800 points), price dropped below last Friday’s low at 94.98 to a fresh 10-week trough at 93.75 in European morning but then staged a brief recovery to 94.79 after the release of better-than-expected U.S. retail sales and a drop in jobless claim. Later, despite brief retreat to 93.92, short-covering contained its downside and the pair rose to 95.81 in Australian morning on Friday.

U.S. retail sales in May came in at 0.6% m/m, better than the forecast of 0.4%, whilst jobless claim came in at 334K, down from the prev. 346K.

Although the single currency edged higher in Asia and extended recent upmove to a fresh 3-1/2 month top at 1.3390 in European morning, active cross selling of euro versus sterling pressured the pair to a low of 1.3279 in New York morning before staging a strong rebound to 1.3380 near New York close.

The British pound ratcheted lower from Australian top at 1.5702 to 1.5645 in European morning. However, renewed buying interest emerged and active cross buying of sterling versus euro pushed the pair above said 1.5702 to a fresh 4-month top at 1.5738 in New York morning before retreating to 1.5670 in U.S. afternoon on profit-taking.

In other news, ECB’s Draghi said ‘decision on PMT bond buy programme was necessary, it was effective and it was in line with ECB mandate; need all decision-makers to take their responsibilities for the euro zone to move forward.’ ECB’s Weidemann said ‘low interest rates in various economies lead to risks in longer term; all central banks face challenge to tighten loose monetary policy once danger to price stability emerges.’ IMF said ‘risks to Portugal reaching core bailout objectives “remains high”; Portugal economic outlook remains somber, public debt “very fragile”; Portugal has met all performance criteria, structural benchmarks underpinning seventh bailout review.’

[B]Data to be released on Friday:[/B]

New Zealand business PMI, Euro zone CPI, employment, U.S. PPI, current account, industrial production, capacity utilization, manufacturing production and consumer confidence on Friday.