The yen was mostly stronger on Friday morning in Asia as the market reaction towards the ongoing EU summit was not so optimistic even after the European Union has decided to inject EUR 120 billion into the system.
The yen is normally viewed as a safe haven currency as Japan's interest rate is very low. The yen tends to gain in times of financial turmoil and vice-versa.
European leaders attending a two-day summit in Brussels have approved EUR 120 billion, or $149 billion, package to promote growth in the debt-stricken eurozone as well as across the broader 27-nation European Union.
"What we already agreed is...to boost the financing of the economy by around 120 billion euro for immediate growth measures," European Council president Herman Van Rompuy told reporters in Brussels on the first day of the two-day summit.
The growth package includes a 10 billion euro capital boost for the European Investment Bank. It also redirects 60 billion euros of unused structural funds to help small enterprises and create youth employment in most needy countries.
The package also calls for launching EU project bonds worth 4.5 billion euros for infrastructure improvements focusing on energy, transport and broadband. The growth plan approved also includes tax-policy pledges and more focused use of EU funding.
Meanwhile, the new Greek government was reportedly proposed for more time to implement the austerity measures demanded by the troika in return for its bailout payments and the IMF hinted that it was open to looking at easing the terms of Greece's economic programme.
Industrial production in Japan showed its largest drop in more than a year also disappointed traders.
The preliminary estimate showed that Japan's industrial production fell to 3.1 percent in May, the biggest decline since March 2011 and much slower-than forecast of a 2.8 percent decline following a 0.2 percent drop recorded in the previous month.
Annually, the industrial production advanced 6.2 percent, lower than the 6.7 percent expected growth.
The yen advanced to a 2-week high of 122.92 against the pound, staying above the key 123.0 mark for the second consecutive session.
The Japanese currency climbed to a 9-day high of 79.15 against the dollar, rising for the second day in a row.
Both the dollar-yen and the pound-yen pairs are retracing from their major resistance levels, suggesting the bull run for the yen is likely to extend in the upcoming sessions unless some concrete EU summit outcome support risk-appetite.
British consumer confidence remained unchanged in June at -29, the latest survey by GfK/NOP revealed today. The figure was in line with market expectations.
Meanwhile, the final estimate on U.S. economic growth in the first quarter of the year was unrevised from the previous estimate and came in line with expectations, according to figures released Thursday by the Commerce Department.
Although the estimate of U.S. GDP growth for the first quarter of 2012 held at 1.9 percent, matching the expectations of most economists, some of the elements contributing to the overall growth were adjusted.
The yen was moderately higher against the euro and the Swiss franc, rising to as high as 98.56 and 82.07, respectively.
The Japanese unit also stabilized against the resource-linked currencies, rising as much as 79.46 against the Australian dollar, 62.28 against the NZ dollar and 76.64 against the Canadian dollar.
Looking ahead, Japan is set to release some economic data later in the session including housing starts and construction orders-for May.
French GDP for the first quarter, Swiss KOF leading indicator for June, eurozone M3 money supply for May, U.K. services index for April and the eurozone inflation estimate for June are expected in the European session.
The U.S. and Canadian GDP data, Canada's industrial product prices and raw materials price indexes -all for May, the Chicago PMI and the University of Michigan's consumer confidence report-both for June are the key releases in the New York session.
by RTT Staff Writer
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