The Japanese yen extended its overnight gains across the board on Wednesday morning in Asia in reaction to a Group of Seven official's clarification that the group's earlier statement on yen was misinterpreted, and there are concerns persisting on the measures over an overly devalued yen.
Earlier on Tuesday, the G7 nations said in a statement released in London that it remained committed to market-determined exchange rate.
"We reaffirm that our fiscal and monetary policies have been and will remain oriented towards meeting our respective domestic objectives using domestic instruments, and that we will not target exchange rates," the group, representing advanced economies, said.
The statement from G7 leaders was widely interpreted that further weakening in the Japanese currency is welcome. The official said later that the interpretation was wrong and the remarks were indeed targeting the yen.
The Japanese yen has fallen sharply in recent months on concern that the Japanese government led by Prime Minister Shinzo Abe is targeting to weaken yen to end deflation.
Analysts expect the yen weakness to continue for some time as the government and the Bank of Japan under a new chief are likely to favor aggressive easing.
An index measuring domestic corporate service prices was up 0.4 percent to 100.7 on month in January, the Bank of Japan said today. That beat forecasts for an increase of 0.2 percent following the downwardly revised 0.2 percent increase in December.
On a yearly basis, prices were down 0.2 percent versus forecasts for -0.3 percent, following the downwardly revised 0.7 percent fall in the previous month.
Consumer confidence in Australia jumped to a more than two-year high in February, according to survey results from Westpac Bank and the Melbourne Institute.
Australia's Consumer Confidence Index rose 7.7 percent from January to a reading of 108.3. The February reading was the highest since December 2010.
For the full year through February, consumer sentiment is up 7.2 percent.
The yen rose to 2-day highs of 101.18 against the Swiss franc and 124.80 against the euro, up almost 0.8 percent from Tuesday's closing values of 101.96 and 125.80, respectively. Next key JPY technical levels are seen at 124.0 against the euro and 101.0 against the Swiss franc.
The Japanese currency also climbed to 2-day highs of 92.84 against the US dollar and 92.66 against the Canadian dollar on Wednesday morning in Asia, up almost 0.7 percent from yesterday's closing quotes of 93.49 and 93.31, respectively. Next key levels to watch for the yen are at 92.35 against the greenback and 92.10 against the loonie.
The yen rose to session's highs of 145.58 against the pound and 96.09 against the Australian dollar in early Asian deals Wednesday. The Japanese currency also challenged yesterday's peak against the New Zealand dollar, rising as much as 78.17.
If the yen extends rally, likely resistance levels are seen at 78.0 against the NZ dollar, 95.80 against the Australian dollar and 145.30 against the pound.
German wholesale price and the Swiss producer & import price indexes-both for January, the eurozone industrial production for December and the Bank of England quarterly inflation report press conference are the key macroeconomic events to watch in the European session.
The U.S. retail sales and import price index-both for January and the business inventories for December are due out in the North American session.
by RTT Staff Writer
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