Yen Nosedives after Tankan Gauge Plunges, Aussie Reverses Earlier Declines

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Yen Nosedives after Tankan Gauge Plunges, Aussie Reverses Earlier DeclinesThe yen declined from its highest level in nearly six weeks against the U.S. dollar after heating stocks lowered investor appetite for havens. The Japanese currency also fell against most of its major counterparts after the Tankan survey indicated that the economy still has weaknesses in certain areas, boosting bets that the Bank of Japan will roll out more easing policies.

The yen plunged 0.2 percent to trade at 101.56 per dollar as of 10:22 a.m. in London after earlier touching 101.24, its highest level since May 21. The currency slid 0.1 percent to 138.93 per euro. The U.S. dollar was trading at $1.3687 per euro and rose to $1.3698 on Monday, its lowest level since May 21.

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“We saw the equity market prove relatively firm and also the outlook from the Tankan was not quite as robust as people had hoped,” Jeremy Stretch, a London-based head of currency strategy at Canadian Imperial Bank of Commerce in London, told Bloomberg. “There’s ground to be made in suggesting we might have reached an extreme in terms of recovery in the yen.”

The Tankan survey, which measures confidence among large manufacturers in Japan, plunged to 12 in the fiscal year ending March from 17 three months ago. The Topix stock index surged 1.1 percent as the MSCI Asia Pacific Index accelerated 0.3 percent.

The Australian dollar shot upwards sharply after the Reserve Bank of Australia signaled that it will retain its record low interest rates. The Aussie surged 0.2 percent to trade at 94.53 U.S. cents after earlier surging to 94.63 cents, the highest level since November 8. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com