During the Asian session on Thursday, the Japanese yen spiked up against other major currencies amid concerns of China slowdown after Chinese manufacturing activity showed continued contraction in September.
The survey results released by Markit Economics showed that flash HSBC/Markit manufacturing purchasing managers' index (PMI) rose to 47.8 in September from 47.6 in August. A PMI reading below 50 suggests contraction of the sector.
The manufacturing output index dropped to a 10-month low of 47 in September from 48.2 in August.
Japan saw a merchandise trade deficit of 754.127 billion yen in August, the Ministry of Finance reported.
That beat forecasts for a shortfall of 829.3 billion yen following the downwardly revised deficit of 518.9 billion yen in July (originally 517.382 billion yen).
Exports were down 5.8 percent on year, beating forecasts for a contraction of 7.5 percent following the 8.1 percent decline in the previous month.
Imports fell an annual 5.4 percent, topping expectations for a decline of 5.5 percent after rising 2.1 percent a month earlier.
The Bank of Japan reiterated that the economy's recovery from last year's earthquake has come a pause, while overseas economies have "moved deeper into a deceleration phase."
Exports and industrial production have been relatively weak, while domestic demand has been resilient, the central bank said in its monthly report.
The yen that fell against the U.S. dollar yesterday after BoJ's expansion of asset purchase programme reversed and climbed to 78.05, its highest level since September 14. If the yen rises further, it may target 78.00 level. The greenback-yen pair closed Wednesday's trading at 78.39.
Against the pound and the franc, the yen hit 6-day highs of 126.38 and 83.90 with 126.00 and 83.00, respectively seen as the next resistance levels. The pound-yen and the franc-yen pairs finished yesterday's deals at 127.18 and 84.56, respectively.
The Japanese currency that ended yesterday's deals at 102.29 against the euro outperformed, hitting 101.40, its highest level in 6 days. On the upside, the yen may break 101.00 level.
Erasing early losses against the NZ dollar, the yen advanced to 64.36 for the first time since September 13. The next upside target level for the yen is seen at 64.00. The kiwi-yen pair traded at 64.83 on Wednesday.
New Zealand's economy expanded 0.6 percent in the second quarter of 2012 compared to the previous three months, Statistics NZ said.
That beat forecasts for an increase of 0.4 percent following the downwardly revised 1.0 percent expansion in the first quarter (originally 1.1 percent).
The yen climbed to 1-week highs of 81.23 against the Australian dollar and 79.78 against the Canadian dollar, compared to yesterday's close of 82.17 and 80.45, respectively. The next resistance level for the yen is seen at 80.5 against the aussie and 79.5 versus the loonie.
Australia's industrial sector in undergoing a moderate recovery in the September quarter after a prolonged period of contraction, the latest Westpac-ACCI Survey of Industrial Trends showed today.
The Westpac-ACCI actual composite rose to 52.4 in the September quarter from 48.3 in the June quarter. This is the first above-50 reading since the March quarter 2011
German producer prices, U.K. retail sales and Swiss trade data - all for August, PMI's from major European economies and Switzerland's second quarter industrial production are expected in the European session.
From the U.S., weekly jobless claims for the week ended September 15 and leading indicators for August are expected in the American morning session.
by RTT Staff Writer
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