Yen, Kiwi & Aussie Recover

The US dollar continues to trade near record highs easing by 4 points to trade at 86.75 in the Asian session as traders booked profits after Friday’s rally on US jobs data. Asian markets are exhibiting a mixed trend on Monday, with investors treading cautiously despite a positive lead from Wall Street where the major averages posted strong gains on Friday amid some upbeat economic data. Geopolitical concerns due to the unrest in Hong Kong and the ongoing conflicts in Syria appear to be weighing on the markets. The Australian market is lower, due largely to a weakening local currency. Bank, mining and energy stocks are weak.

The Australian dollar opened weak against the US dollar, having declined to a four-year low late last week. Around noon, the Aussie was quoting at 0.8678, down from Friday’s close of 0.8797. Meanwhile, the Japanese market rallied sharply, lifted by strong US jobs data and a weaker yen. The US dollar traded in the upper 109 yen range in early deals in Tokyo. The yen is currently trading at 109.60 to the dollar, against Friday’s close of 108.75 yen per dollar. Investors reacted positively to a report from the Labor Department showing much stronger than expected job growth in the month of September. The market also benefited from a report from the Commerce Department that showed US trade deficit to have unexpectedly narrowed in August. Japan’s currency slid to a six-year low last week, following its worst month since January 2013 in September, amid prospects for the BOJ to continue unprecedented monetary easing while the Federal Reserve weighs the timing of its first interest rate increase. Kuroda will hold a news conference after a two-day meeting with his board that starts today. He reiterated on Oct. 3 that he doesn’t think a weak yen is a minus for the Japanese economy overall. Kuroda defended the central bank’s aggressive monetary-easing tactic for its impact on the yen, arguing that the weaker currency is good for the economy on balance and also that the BOJ’s 2 per cent annual inflation target is achievable in “around two years”.

He was facing questions in parliament about the BOJ’s controversial monetary-easing strategy, which has been criticized for forcing up import costs without triggering an attendant rise in exports and also for eroding real incomes.

The kiwi fell to a record low on Friday after the release of US jobs data and is trading at 0.7770 in the morning session. The NZD declined most of last week after the central bank announced on Sept. 29 that it sold currency in August in its biggest intervention in seven years. Policy makers have been warning for months that the local dollar’s strength is unsustainable and hurting the economy.

The FOMC is reviewing the timing for its first rate increase since 2006 amid signs the U.S. economy is recovering. The central bank, which sets policy on Oct. 29, is on track to end a program of stimulatory bond purchases this month. The minutes of the Fed’s Sept. 16-17 meeting are due on Wednesday.