The Japanese yen recovered its early losses against the other major currencies in the Asian session on Monday following the release of a report showing the Japanese economy to have unexpectedly contracted in the July – September quarter.
With the yen advancing, the benchmark Nikkei 225 index is currently down 447.60 points or 2.56 percent at 17,043.
Data from the Cabinet Office showed that Japan’s gross domestic product unexpectedly contracted 1.6 percent on year in the third quarter of 2014, tipping the country back into recession. The headline figure was well shy of forecasts for an increase of 2.2 percent following the downwardly revised contraction of 7.3 percent in the second quarter (originally -7.1 percent).
On a quarterly basis, GDP slid 0.4 percent versus forecasts for an increase of 0.5 percent following the downwardly revised 1.9 percent contraction in Q2 (originally -1.8 percent).
The yen fell against the most major currencies immediately after the release of the report but recovered thereafter.
The U.S. dollar also edged down against the other major currencies in reaction to the data.
In the New York session on Friday, the yen was higher against the other major currencies. Nevertheless, the yen fell 0.86 percent against the euro, 0.92 percent against the Swiss franc and 0.81 percent against the U.S. dollar on Friday.
In the Asian trading, the yen recovered to a 6-day high of 181.41 against the pound and a 4-day high of 115.45 against the U.S. dollar, from early 5-day low of 183.36 and a 7-year low of 117.04. At last week’s close, the yen was trading at 182.17 against the pound and 116.28 against the greenback. If the yen extends its uptrend, it is likely to find resistance around 180.85 against the pound and 114.51 against the greenback
Against the Swiss franc, the yen edged up to 120.75 from a record low of 121.95. The pair closed last week’s deals at 121.22. The yen may test resistance around the 119.80 area.
Moving away from an early 6-year low of 146.52 against the euro, the yen edged up to 145.09. At Friday’s close, the yen was trading at 140.56 against the euro. On the upside, 144.13 is seen as the next resistance levl for the yen.
Looking ahead, Eurozone trade data for September is due to be released in the European session.
At 4:30 am ET, Bank Of England’s Chief Economist Andy Haldane will deliver a speech at the Royal Society of Medicine conference in London.
In the New York session, U.S. empire state survey for November, industrial and manufacturing production data for October and data on covered bond purchases by the European Central Bank are due.
At 9:00 am ET, European Central Bank President Mario Draghi will testify on Monetary Policy before the Committee on Economic and Monetary Affairs in Brussels.
The material has been provided by InstaForex Company – www.instaforex.com