US Dollar Plunges To 7-month Low Against Japanese Yen

33 minutes ago
(RTTNews) - During early Asian deals on Friday, the US dollar plunged to a 7-month low against the Japanese yen and 1-month low versus the British pound. The dollar also edged down against the European currency and the Swiss franc.

The U.S. Labor Department revealed yesterday that initial jobless claims came in at 550,000 for the week ended September 5th, which was down 26,000 from the previous week's revised total of 576,000. Economists had expected jobless claims to come in at around 560,000.

Continuing claims, which measure the number of people receiving ongoing unemployment help, fell 159,000 to 6.088 million in the week ended August 29th.

Separately, the Commerce Department released a report showing that the U.S. trade deficit widened by much more than expected in July, with the value of imports increasing at a much faster pace than the value of exports.

The report showed that the trade deficit widened to $32.0 billion in July from a revised $27.5 billion in June. The deficit was much wider than the estimates of economists, who had expected a deficit of $27.3 billion.

Against the European currency, the US dollar edged down during early Asian deals on Friday. At 10:45 pm ET, the dollar touched a low of 1.4614 versus the euro, compared to 1.4583 hit late New York Thursday. The next downside target level for the dollar is seen around 1.457.

The US currency that closed Thursday's North American session at 1.6653 against the British pound declined to a 1-month low of 1.6709 during today's early Asian deals. If the US dollar falls further, 1.690 is seen as the next target level.

Yesterday, the Bank of England decided to maintain its interest rate for the sixth consecutive month and also voted to continue the GBP 175 billion asset purchase programme using central bank reserves.

As expected, the Monetary Policy Committee of the central bank decided to hold the official Bank Rate paid on commercial bank reserves at 0.5%. The rate now stands at the lowest level since the central bank was established in 1694. The previous change in the rate was a reduction of 0.5 percentage points in March 2009.

The MPC expects the asset purchase programme to take another two months to complete. The scale of the programme will be kept under review, the bank said in a statement.

Initially, the central bank introduced a GBP 75 billion programme of asset purchases financed by the issuance of central bank reserves on March 5. Later, the size of the quantitative easing was raised to GBP 125 billion on May 7 and again to GBP 175 billion on August 6.

Against the Swiss franc, the greenback traded down during Friday's early Asian trading. At 10:45 pm ET, the dollar-franc pair slipped to 1.0364, compared to Thursday's closing value of 1.0387. The pair is currently trading at 1.0369 with 1.032 seen as the next target level.

The US dollar plunged to 91.36 against the Japanese yen during early Asian deals on Friday. This set the lowest point for the dollar since February 13, 2009. On the downside, 90.2 is seen as the next target level for the U.S. currency. The dollar-yen pair closed Thursday's New York deals at 91.75.

Japan's economy grew in the April-to-June quarter, but not by as much as originally reported, a government report showed today.

Japan's gross domestic product increased 0.6 percent from the preceding quarter or 2.3 percent in annualized terms. The growth reported by the Cabinet office was below the preliminary estimate of 0.9 percent on-quarter growth and 3.7 percent annualized growth.

Capital spending was downwardly revised to 4.8 percent on quarter from the initial report of a 4.3 percent decline.

Looking ahead, Japan is set to release its consumer confidence data for August at 1:00 am ET Friday. The consumer confidence index is expected to come in at 40.2, up from 39.7 and the household consumer confidence is called at 40.5, up from 39.4.

In the European session today, the Italian industrial production data and the U.K. PPI reports are due for release.

Turning to the U.S., the Department of Commerce will release its import and export price reports for August at 8:30 am ET.

At 10:00 am ET, the Commerce Department is due to release its wholesale inventories report. Economists expect wholesale inventories at the end of July to show a 0.1% decline.

The preliminary reading of the University of Michigan's consumer sentiment index for September is due to be released at the same time. The report is expected to show that the consumer sentiment index rose to 67.5 in the month.

For comments and feedback: contact editorial@rttnews.com

Copyright(c) 2009 RTTNews.com, Inc. All Rights Reserved