Yen keeps gains as foreigners snap up Japan stocks
TOKYO, Aug 23 - The yen clung to solid gains on Tuesday as foreign investors continued their love affair with Japanese stocks, helping to push the Nikkei share average to a fresh four-year high.The Japanese currency has stolen the limelight in a week devoid of major economic data in the United States and with many market players away on summer vacation — resulting in thinner trading volumes.“It’s all about the yen right now,” said Hideaki Furuyama, manager of forex trading at Trust & Custody Services Bank. “As long as foreigners keep buying Japanese stocks we should see the yen drift higher.”
Yen bulls have also been emboldened by newspaper polls showing growing public support for Prime Minister Junichiro Koizumi and his economic reform plans heading into the Sept. 11 snap election.
Investors are also more upbeat on the Japanese economy. The Reuters Tankan, a monthly survey of business sentiment, showed on Tuesday that business confidence was flat in August but companies saw improvement in the months ahead.
As of 0300 GMT, the dollar fetched 109.85 yen, up only slightly after it slipped around 0.7 percent on Monday. The dollar touched a seven-week low of just above 109 yen last week.
The Nikkei share average bolted above 12,500 on Tuesday to its highest level since July 2001, garnering more support from foreign investors who have already gobbled up some 6 trillion yen ($54.71 billion) of Japanese equities this year.
The euro fetched around 134.15 yen, down from 134.26 yen in late U.S. trade. The single currency hit a seven-week trough of 133.53 yen on Monday, breaking below a low of 133.58 yen hit soon after China revalued the yuan on July 21.
The single currency bought $1.2210, down from $1.2230 in late U.S. trade but well above a three-week low of around $1.2125 hit on Friday.
GERMAN CONFIDENCE
The ZEW Centre for European Economic Research will release its indicator of German economic sentiment at 0900 GMT. The data is expected to underscore a modest improvement in consumer sentiment in the euro zone’s biggest economy.
A strong reading in that, or Thursday’s closely watched Ifo survey of German business sentiment, will likely be taken by some investors as an excuse to buy euros, Morgan Stanley strategists said in a research note.
The single currency has rebounded 3 percent from a 14-month low around $1.1870 hit on July 5, not long after voters in France and the Netherlands rejected the European Union Constitution.
The dollar has faltered this week after bouncing back against the euro and the yen last week following a series of strong data that cemented the likelihood of more dollar-supportive interest rate rises from the Federal Reserve in coming months.
Chicago Fed President Michael Moskow may provide some guidance for investors on Wednesday with a speech on the U.S. economic outlook.
Alan Greenspan will appear on Friday at an economic symposium in Wyoming, where the Fed chairman is due to reflect on his 18-year stint at the helm of the central bank but is not expected to touch on the outlook for monetary policy.
The Fed’s series of 10-straight rate hikes since June 2004 has helped the dollar arrest a three-year, 30 percent slide against major currencies to the end of 2004, driven by worries about large and growing budget and trade deficits.
The dollar index — a gauge of its performance against six major currencies — is up 9 percent this calendar year.
Written by admin on September 23rd, 2005 with
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