Yen Gains Broadly On Risk Aversion

The greenback resumed its recent decline against the Japanese yen as Bank of Japan Governor Haruhiko Kuroda failed to calm markets and poor data from China during the week increased risk aversion.

BOJ Governor Kuroda said 'BOJ will continue to make efforts to contribute to Asia growth, stem deflationary pressure that plagued Japan for 15 years; it's extremely important to ensure JGB market stability; we don't have specific targets for stock prices, or FX, we will not comment on day-to-day moves; want to avoid volatility in JGB market via flexible management of money market operations; BOJ decided on necessary and sufficient monetary easing steps in April.'

Versus the Japanese yen, despite dollar's strong rebound to session high at 102.59 at Asian open, price met renewed selling interest there and tumbled to 101.08 in Asian morning after comments from Bank of Japan Governor failed to calm the Japanese equity markets. The greenback pared intra-day losses and rebounded to 102.13, helped by cross-selling of yen (EUR/JPY rallied from 130.71 to 132.58). However, renewed selling there knocked price lower and dollar later dropped to session low at 100.66 in New York afternoon before staging a recovery to 101.32.

The single currency traded with a firm undertone in Asia and strengthened from 1.2904 to 1.2944 at European open before rallying after German Ifo business confidence came in well above forecasts and price rose to an intra-day high at 1.2994 in European morning. However, euro pared intra-day gains and retreated to 1.2911 in New York morning as a stronger-than-expected U.S. durable goods order added to speculation the Federal Reserve may slow the pace of its bond purchases soon.

On the data front, German Ifo business climate in May came in at 105.7, better than the expectation of 104.5; German Ifo current condition in May is reported 110.0, higher than the expectation of 107.2. U.S. Durable goods in Apr came in at 3.3%, better than expectation of 1.5%.

The British pound strengthened in Asian morning and gained to 1.5136 in European morning before retreating briefly to 1.5074 at New York open on dollar's strength, following release of U.S. data. However, cable found buying interest there and rose to session high at 1.5144 in New York morning.

In other news, BoE's Paul Fisher said he 'favors slow amount of QE over time, doesn't want U.S. style indefinite commitment to QE; no obvious evidence that QE is less powerful now than before; in U.S., QE has had more impact in recent months than before.'

Data to be released next week :

U.K. hometrack housing survey. U.K. and U.S. market holiday on Monday.

Japan CSPI, Germany import price index, Swiss trade balance, France consumer confidence, U.S. home price and consumer confidence on Tuesday.

Japan retail sales, Australia Westpac leading economic index, Swiss UBS consumption indicator, Germany unemployment rate, CPI, HICP, U.K. CBI distributive trades, U.S. redbook retail sales and Canada BoC rate decision on Wednesday.

Australia building approvals, private capex, Swiss GDP, Italy PPI, EU economic sentiment, business climate, consumer confidence, Canada PPI, U.S. GDP annualised, PCE, jobless claims and pending home sales on Thursday.

Japan manufacturing PMI, household spending, unemployment rate, National CPI, Tokyo CPI, industrial production, housing starts, construction orders, Germany retail sales, France PPI, Swiss KOF indicator, Italy unemployment rate, CPI, HICP, U.K. mortgage approvals, Canada GDP, U.S. personal income, personal consumption and PCE index on Friday.