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Yen Slides On Abe's Call For Extensive Monetary Easing

Yen Slides On Abe's Call For Extensive Monetary Easing
11/15/2012 1:45 AM ET

The yen fell across the board on Thursday as, Japanese opposition leader Shinzo Abe called for unlimited monetary easing to counter deflation.

The leader of the Liberal Democratic Party of Japan said the Bank of Japan would cut the benchmark rate to zero or lower and will increase public investment if his party comes to power. Abe also proposed a central bank inflation target of up to 3 percent.

The market took Abe's comments seriously as the former prime minister is a potential candidate for the nation's top-post in the coming elections. He was elected to lead Japan's main opposition party in September.

The yen began losing ground on the speculation of political uncertainties in the near-future after Prime Minister Yoshihiko Noda pledged on Wednesday to dissolve the Parliament and hold fresh elections.

Elsewhere, the risk-aversion mood remained intact on lingering concerns about the eurozone debt and the U.S. fiscal cliff.

Greek Finance Minister Yannis Stournaras and Labor Minister Giannis Vroutsis told the European Parliament's Economic Affairs and Employment Committees on Tuesday that it is up to the EU to come forward with the next aid tranche.

There were many distortions in the Greek finance and labor markets that had to be tackled, but Greece has taken all the necessary measures, they noted.

Anti-austerity protests broke out across Europe as labor unions organized coordinated walkouts in Greece, Spain, Portugal and Italy.

Downbeat economic data from the United States overnight also weighed down on sentiment, with retail sales falling 0.3 percent in October following an upwardly revised 1.3 percent increase in September. Economists had expected sales to edge down by 0.1 percent.

The yen reached 80.90 against the US dollar around 12:35 am ET, its weakest level since April 27. The yen is fast approaching the 81.0 per dollar mark after a gap of several months and its bearish extension could help it to re-visit the 81.50 support level.

The yen also reached a 2-week low of 85.71 against the Swiss franc and a weekly low of 103.13 against the euro around 12:50 am ET. On the downside, the Japanese yen may find target levels at 103.40/50 against the European shared currency and 86.10 against the Swiss unit.

The Japanese yen also extended yesterday's downtrend against the pound in late Asian deals, falling to an 8-day low of 128.32 around 12:55 am ET. The key support level for the yen against the British sterling is seen around the 128.85 area.

The yen also underperformed against resource-linked currencies, falling to 8-day lows of 83.88 against the Australian dollar, 65.72 against the New Zealand dollar and 80.76 against the Canadian dollar around 12:55 am ET. If the yen extends its declines, likely support levels are seen at 84.00/10 against the aussie, 65.85 against the kiwi and 81.20 against the loonie.

Inflation expectations among Australian consumers declined in November, a survey by the Melbourne Institute revealed today. Inflation expectations decreased to 2.2 percent in November from 2.7 percent in October. This is within the Reserve Bank of Australia's 2-3 target.

New motor vehicle sales in Australia were down a seasonally adjusted 2.8 percent on month in October, the Australian Bureau of Statistics said. New vehicle sales now stand at 95,720 following the downwardly revised 4.6 percent gain in September.

On a yearly basis, new motor vehicle sales climbed 8.6 percent, slowing from the 14.4 percent gain in the previous month.

Looking ahead, the preliminary third quarter GDP reports from Germany, Italy and the eurozone, the ECB monthly report for November, eurozone CPI for October, the Italian current account data for September and the U.K. retail sales for October are expected to influence the market in the European session.

The U.S. weekly jobless claims for the weekended November 10, the consumer price index for October, the empire manufacturing index for November, the Philadelphia Federal Reserve's manufacturing index for November, weekly crude oil inventories and speeches by a number of Fed officials, including the chairman Ben Bernanke, are expected to garner market attention in the North American session.

Canadian manufacturing sales for September, existing home sales for October and a review by the Bank of Canada are also on tap in the New York session.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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