FRX: Yen extends losses against dollar as risk appetite grows
Forex Pros – The yen extended its losses against the U.S. dollar on Monday, tumbling to a 2-day low, as rising risk appetite in the wake of China’s limited yuan float damped demand for the yen.
USD/JPY hit 90.28 during European afternoon trade, its highest since last Thursday; the pair subsequently consolidated at 91.31, gaining 0.67%. The pair was likely to find resistance at 92.11, the high of June 14, and support at 89.89, the low of May 27.
On Saturday, the People’s Bank of China announced that it would allow the yuan to trade in a 0.5% daily trading band against the U.S dollar. The move signaled the bank’s increased optimism with regard to China’s economic growth and the global economic recovery, fuelling a wave of risk appetite.
The yen was also down against the euro, with EUR/JPY shedding 0.71% to hit 113.16.
Earlier Monday, Japanese finance minister, Yoshihiko Noda, lauded China's announcement to allow more flexibility in the yuan, saying: "I expect it to be a plus for the China and Asia economies as well as the world economy.”
Also Monday, government data showed that Japan's all-industries activity index, which covers a broad range of economic activity, rose in April at a slower rate than expected.
