Yen Gained Little After Less Than Expected Hawkish Testimony by Bernanke

Yen gained little strength against dollar after Fed Chairman Ben Bernanke?s testimony today. Stocks regained strength on expectations of higher earnings and Bonds traded mostly sideways.


Nippon Oil to pay in yen for Iran crude:
Nippon Oil Corporation, Japan’s biggest refiner, is set to switch payment for the crude it buys directly from Iran from dollars to yen by October, its chairman Fumiaki Watari said yesterday. An industry source said earlier that Nippon Oil was the first Japanese customer to accept Iran’s formal request last week to switch to yen, in line with Tehran’s move over the past year to limit dollar-denominated trade.
Source: Gulf Daily News
Tokyo Electric Shares Drop Most in 7 Years on Quake:
Shares of Tokyo Electric Power Co. dropped the most in seven years on concern the company’s nuclear facility in central Japan, the world’s biggest, may be shut for a year after an earthquake caused radioactive leaks. The stock slumped as much as 7.5 percent, the largest intraday decline since Feb. 18, 2000, after the Nikkei said the shutdown will be prolonged by checks to ensure the plant will resist future earthquakes. The shares had the second-biggest decline on the Morgan Stanley Capital International World Index.
Tanigaki Says Sales Tax Increase Unavoidable, However Unpopular
Former Finance Minister Sadakazu Tanigaki said Japan will have to raise its sales tax, even though Prime Minister Shinzo Abe has avoided the issue ahead of national elections this month. Abe, whose Liberal Democratic Party is likely to lose seats in the July 29 parliamentary upper house election, said this month that raising the sales tax could harm the economy while also refusing to rule out such a move.
Yen gained marginally against dollar even after Bernanke?s testimony showed signs of slowdown in the worlds largest economy. At 4:00 EST USDJPY was trading at 121.82. Fed Chairman Ben S. Bernanke will appear before the Senate Banking Committee at 9:30 a.m. in Washington. Bernanke said in testimony to the House Financial Services Committee yesterday that a slump in construction will continue to ``weigh’’ on growth, while core inflation may edge down. Another reason of Yen?s recent gains is increased risk aversion amongst the carry trades. It mostly flat against other counterparts. Also, more than expected department sales issued today did not help gain momentum in Yen.

Stocks rebounded today as investors raised expectations on earnings of trading and pharmaceutical companies. Shares Chugai Pharmaceutical advanced 4.9 percent. Cannon which had been a major player amongst recent decliners jumped 0.6 percent at 7,050 yen. On the negative side, shares of Tokyo Electric Power Co. fell almost 6 percent after a newspaper reported on Thursday that the government may order an earthquake-hit nuclear plant to stay shut for more than a year while a safety study is carried out. The benchmark Nikkei gained 101 points closing at 18,116.57. Trade volume was low with 967 million shares changing hands, down from 1.2 billion shares on Wednesday morning. Advancing shares outnumbered decliners 987 to 582.

Japan bond market did not see much action today amid speculation signs of slowing economic growth in the US will increase demand for the fixed payments on government debt. The yield on the bonds closed half basis points higher at 1.905