The Yen rises as a safe haven whiles stocks fall and risk appetite dissipates

The Japanese currency strengthened against the euro and the greenback as Asian stocks fell and Japanese machinery orders unexpectedly declined, adding to signs the global recession is far from over. The JPY rose against all of the 16 major currencies for a second day on speculation the worldwide slump will sap corporate earnings, increasing demand for safer assets. The greenback fell against the yen on concern the Dollar’s role as the world’s reserve currency will be questioned at a Group of Eight meeting starting today. “Worries are mounting that the optimism about the global recovery is overdone,” said Ryohei Muramatsu, manager of Group Treasury Asia in Tokyo at Commerzbank AG, Germany’s second- biggest bank. “Investors are risk averse. The yen is becoming the strongest currency, appreciating across the board.”
The USD/JPY is currently trading at 94.21 as of 8:57am, London Time.

The British Pound fell against the greenback and the euro on Tuesday as weaker than expected UK industrial production data further heightened doubts that the economy is poised for a recovery. The figures showed British manufacturing output fell 0.5 percent during May. The sterling continues to suffer in the wake of the U.S. jobs figures last week, which worried investors about the global economic outlook and prompted traders to shun perceived riskier currencies. Sterling was the currency that benefited the most from the optimism on the global economy in recent months and it is now the most vulnerable," BNP Paribas currency strategist Ian Stannard said. The GBP/USD is currently trading at $1.6080 as of 9:02am, London Time.

Investors should buy the Canadian dollar against an equally weighted basket of currencies including the U.S. dollar, the pound and New Zealand’s dollar because recent losses are overdone, RBC Capital Markets said. The Canadian dollar, which was the worst Group of 10 performer in June, is “poised to take back some of the lost ground, most notably against some of the currencies that strongly outperformed,” RBC Capital’s David Watt, a senior currency strategist in Toronto, wrote in a note to clients yesterday. RBC is a unit of Royal Bank of Canada, the nation’s largest lender. The USD/CAD is currently trading at 1.1650 as of 9:11am, London Time.

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