Yen Continue To Rise as Investors Pare Carry Trades Amidst Global Cues

Japanese equities were down following losses from US equities sending 10-yields to it lowest levels in two months. Yen surged as global decline in equity prices pressured investors to repay Japanese currency loans.


UN Inspectors Assess Japan Nuke Plant
A team of U.N. nuclear inspectors on Monday began a four-day assessment of a nuclear power plant severely damaged by an earthquake last month.The magnitude-6.8 quake in Niigata province on July 16 killed 11 people and injured more than 1,000. It also caused malfunctions and leaks at the plant _ the world's largest in terms of capacity _ and raised concerns about safety at Japan's nuclear power stations.
Japan mourns Hiroshima atomic bomb
Japan marked the 62nd anniversary of Hiroshima's atomic bombing with a solemn ceremony on Monday as the city's mayor criticised the United States for refusing to give up its nuclear weapons programme. Tens of thousands of elderly survivors, children and dignitaries gathered at the Peace Memorial Park, near ground zero where the bomb was dropped, to remember the more than 250,000 people who ultimately died from the blast.
Japan PM's support at new low - Mainichi Shimbun poll
According to a Mainichi Shimbun poll released Monday,Voter support for Prime Minister Shinzo Abe's cabinet has plunged by more than a quarter since an election defeat for his ruling Liberal Democratic Party. The poll found that support for Abe's cabinet tumbled to a new low of 22 percent, down from 31 percent just before the recent upper house elections. If Japan held snap elections for the lower house right now, 'the Liberal Democratic Party may fall out of power,' said Yamasaki, who has clashed with Abe in the past.
The yen reached four-month high against the dollar on speculation that hedge fund losses and a slowing economy will prompt Fed to cut interest rate this year. Federal Fund futures currently show that there is 84 percent chance that the Fed will cut its 5.25 percent benchmark rate by October, up from 14 percent a month earlier. Yen also climbed against the Cable and New Zealand dollar as slump in global bourses pushed investors to repay Japanese currency loans. The dollar dropped as low as 117.19 against the yen on Monday mainly triggered by less than expected Nonfarm payrolls. Volatility implied by yen currency options expiring in one month with a strike price near the current level reached 10.45 percent, the highest in 14 months. Higher volatility may discourage carry trades as it exposes these bets to more currency risk. Japan's broadest indicator of the outlook for growth issued today signaled for the first time in eight months that the economy will expand and that BOJ might hike rate by the end of this year. The leading index climbed to 80 percent in June, the first time it has been at or over 50 since October. The yen traded at 117.59 per dollar at 12:45 a.m. in New York, from 117.64 before the report was published.

Japanese stocks plummeted mostly tracking losses from US equities. Visible signs of slowdown in the world?s largest economy and Japan?s most significant trading partner feared investors that it will hurt Japanese corporations? sales. Sony Corp fell the most in almost five months despite showing better than expected profits last week and Canon lost 2.3 percent. Toyota on the other hand advanced 1.4 percent as its net income jumped 32 percent from a year earlier. The Nikkei 225 stock average dropped 0.4 percent closing at 16,914.46. The stocks recovered a in the later half of the day as the Leading Index for the first time in eight months showed that the economy will expand.

Japanese bonds rose on speculation that investors will shift money to more secured assets amid declines in the global equities fueled by signs of slowdown in the US. The yields were pushed toward the lowest in two months closing at 1.721