Yen Rises Amid Risk-Aversion

(RTTNews) - The Japanese yen strengthened against other major currencies in the European session on Friday, as European stocks traded lower, as investors fretted about overvalued tech valuations and an uncertain path for U.S. monetary policy.

Concerns about intervention and the resurgence of demand for safe havens cause the Japanese yen to halt its recent decline.

Any further gains for the JPY could be limited by fiscal worries and the uncertainty around the BoJ rate hike.

Satsuki Katayama, Japan's finance minister, made remarks earlier today that stoked rumors that the government will intervene to stop the JPY's continued decline.

Concerns regarding Japan's deteriorating fiscal situation and the availability of additional government debt are heightened by the cabinet's approval of a ¥21.3 trillion economic stimulus program.

Furthermore, anticipations that the Bank of Japan (BoJ) would postpone hiking interest rates could limit JPY gains.

In economic news, data from Jibun Bank showed that the services sector in Japan continued to expand in November, and at a steady pace, with a services PMI score of 53.1. That's unchanged from the October reading and it remains above the boom-or-bust line of 50 that separates expansion from contraction.

The survey also said the manufacturing PMI ticked up to 48.8 from 48.2 in the previous month, while the composite moved up to 52.0 from 51.5.

Data from the Ministry of Finance showed that Japan posted a merchandise trade deficit of 231.8 billion yen in October. That beat expectations for a shortfall of 280 billion yen following the 234.6-billion-yen deficit in September.

Exports were up 3.6 percent on year at 9.766 trillion yen; that also beat forecasts for a gain of 1.1 percent following the 4.2 percent increase in the previous month.

Imports rose an annual 0.7 percent to 9.998 trillion yen versus expectations for a decline of 0.7 percent following the 3.0 percent gain a month earlier.

In the European trading today, the yen rose to 2-day highs of 180.30 against the euro, 204.38 against the pound and 194.25 against the Swiss franc, from early lows of 181.66, 206.06 and 195.63, respectively. If the yen extends its uptrend, it is likely to find resistance around 179.00 against the euro, 199.00 against the pound and 190.00 against the franc.

Against the U.S., the Australia, the New Zealand and the Canadian dollars, the yen advanced to 2-day highs of 156.56, 100.61, 87.49 and 111.02 from early lows of 157.54, 101.66, 88.14 and 111.83, respectively. The yen may test resistance around 153.00 against the greenback, 98.00 against the aussie, 86.00 against the kiwi and 109.00 against the loonie.

Looking ahead, Canada retail sales data for September, new housing price index for October, U.S. PMI data for October, U.S. University of Michigan's consumer sentiment data for November and U.S. Baker Hughes oil rig count data are set to be released in the New York session.