The Japanese yen rose on Thursday on signs of economic recovery in Japan, following better than expected housing starts data. At the moment, the U.S. dollar lost 0.43% of its value to trade at ¥80.42, while the euro edged lower to ¥116.54, down 0.07%.
The yen found strength in better than expected housing starts data. In May, Japan’s housing starts were 6.4% above the level in May 2010. This represents a significant improvement on April’s 0.3% and 3.5% predicted by most analysts. The latest data suggest Japan’s reconstruction program is starting to kick in.
Japan has been rocked hard by the earthquake/tsunami disaster. Its economy shrank in the first quarter of the year, as a result, and traders are hoping that the government’s reconstruction plan can provide enough boost for the Japanese economy to make a strong rebound in the June quarter.
Japan’s manufacturing activity data, also released today, is less encouraging, however. In June, Japan’s Manufacturing PMI fell slightly from 51.3 in May to 50.7 in June. Good news is that is spite of the fall, the June value still indicates expansion. The output part of the index rose from 51.5 in May to 52.7 in in June. At the same time, the exports component fell from 49.2 to 49. The data suggests that output is recovering following energy shortages and supply disruptions. Some traders might be worried that exports are not rebounding and are still below 50, which indicates exports are contracting.
From the Asian-Pacific currencies, the New Zealand dollar also put up a good performance in today’s trading. The Kiwi added value against the greenback and is following the euro rebound. At around 6:50 GMT, the greenback stood at 1.2067 (down 0.38%), while the euro traded around 1.7487, or the same as yesterday’s close.
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