Yen Soars To New Multi-day Highs Against Majors On Weak Equities

Wednesday, the yen rose to new multi-day highs against its major counterparts as a fall in global stock prices prompted investors to seek the safety of the Japanese currency.

World stock markets extended their losses today as Japan's much weaker-than-expected economic growth and rising debt loads around the world added to concerns the global recovery was faltering.

Investors in Asia were rattled after Japan downwardly revised its economic growth for the third quarter today to reflect a marked worsening of domestic demand in the country.

The Cabinet Office announced that gross domestic product expanded just 0.3% quarter-on-quarter in the third quarter, revised down from the 1.2% growth estimated initially.

Economists had expected the GDP growth rate to be revised to 0.7%.

After falling sharply Tuesday, European markets added to their losses, with benchmarks in Germany, France and Britain down 0.1 percent or more.

Earlier in Asia, Japan's Nikkei 225 stock average fell 135.75 points, or 1.3 percent, to 10,004.72.

Hong Kong's key index shed 318.76, or 1.4 percent, to 21,741.76, and Shanghai's benchmark was off 1.7 percent at 3,239.57.

Australia's market lost 0.7 percent, India's stock measure declined 0.4 percent and Singapore's market was off 0.3 percent.

The South Korean market defied the downdraft and gained 0.4 percent to 1,634.17, helped after the International Monetary Fund raised the country's economic growth forecast for 2010. Taiwan's market also rose 0.4 percent.

Against the US dollar, the Japanese yen traded higher during early deals on Wednesday. At 3:35 am ET, the yen climbed to a 6-day high of 87.49 against the dollar, compared to 88.45 hit late New York Tuesday. The next upside target level for the yen is seen around 87.1.

The Japanese unit that closed Tuesday's North American session at 130.04 against the European currency reached a 12-day high of 128.80 at 3:55 am ET Wednesday. If the yen gains further, 128.0 is seen as the next target level.

Germany's Federal Statistical Office said today in a final report that the consumer price index or CPI increased 0.4% year-on-year in November, faster than the flat reading in the previous month. The consumer price inflation in November was revised from 0.3% estimated initially. The consumer prices increased for the first time since June 2009.

French trade deficit widened to EUR 4.39 billion in October from EUR 2.80 billion deficit in September, data released by the Customs Office showed today. Economists had forecast deficit to narrow to EUR 2.3 billion.

Against the Japanese currency, the British pound edged higher during today's early deals. At 3:40 am ET, the yen rose to an 8-day high of 142.05 against the pound, compared to Tuesday's closing value of 144.07. On the upside, 141.2 is seen as the next target level for the yen.

Consumer confidence in the United Kingdom held firm in November led by greater optimism about the future economic situation, the results of a survey showed today.

The Nationwide Building Society announced that the consumer confidence index stood at 73 in November, unchanged from the upwardly revised reading for October. The expectations index rose to 108 from 107 and this was offset by a decline in the present situation index by 2 points to 20. The index measuring spending intentions rose to 106 from 104.

The yen that closed Tuesday's New York deals at 86.15 against the Swiss franc hit a 12-day high of 85.30 at 3:50 am ET Wednesday. The franc-yen pair is currently trading at 85.63 with 84.7 seen as the next target level.

Switzerland's unadjusted jobless rate rose to 4.2% in November from 4% recorded in October, the State Secretariat for Economic Affairs said today. That was in line with economists' expectations. At the same time, the seasonally adjusted jobless rate stood stable at 4.1%.

Across the Atlantic, the U.S. wholesale inventories report for October is due in the North American session.

News are provided by InstaForex.