Market Review - 06/06/2013 22:26GMT

Yen rallies on the selloff in Japan's Nikkei future


The Japanese yen strengthened against other currencies on Thursday due to the selloff in Japan's Nikkei future as traders unwound their early bets on weak Japanese currency. The greenback was pressured on fears of disappointing U.S. jobs data on Friday.

Versus the Japanese yen, the greenback traded narrowly below 99.47 in Asian and European sessions. Price later tanked in New York morning on dollar's broad-based weakness and then tumbled to a 1-1/2 month low at 95.90 at U.S. midday due to the selloff in Japan's Nikkei-225 futures (down by more than 3%) before staging a recovery.

The single currency edged higher from Asian low at 1.3075 to 1.3131 in European morning on cross buying of euro versus yen but then retreated to 1.3090 in New York morning. However, the pair rose sharply due to the comments from ECB President Draghi who said 'technically ready for negative deposit rates, but no reason to act right now'. Dollar's broad-based selloff pushed euro further higher to a 3-month top at 1.3306 at U.S. midday.

The European Central Bank President Mario Draghi said 'ECB's monetary policy stance will remain accommodative as long as needed; significant improvement in Financial markets since last summer should work into real economy; still see downside risks to economic outlook; see subdued underlying price pressure over medium term; inflation risks are broadly balanced; discussed negative deposit facility; we keep these non-standard measures on the shelf.'

The British pound ratcheted higher in tandem with euro from Asian low at 1.5282 and rose to 1.5465 in European session. Later, the rally in eur/usd pushed the pair further higher to 3-1/2 month high at 1.5685 at New York midday before stabilising.

The Bank of England kept QE asset purchase total unchanged at 375 billion sterling and maintained bank rate at 0.5%. ECB left benchmark interest rate unchanged at 0.5% as expected.

Data to be released on Friday:

Japan leading indicators, Germany trade balance, current account, import, export, WPI, industrial production, France trade balance, UK trade balance, Canada unemployment, U.S. non-farm payrolls, private payrolls, unemployment rate and avg. hourly earnings.