Yen, Dollar Weaken as Stock Gains Boost Higher-Yield Currencies

March 10 (Bloomberg) -- The yen and the dollar weakened on speculation gains in Asian stocks and U.S. equity futures fueled demand for higher-yielding assets.
The euro approached a two-month high against Japan’s currency on expectations European investors will bring home overseas earnings before the end of the first quarter. South Korea’s won gained the most in almost two months against the dollar as overseas investors bought more of the nation’s shares than they sold. The Australian and New Zealand dollars advanced as Asian stocks rose.

“We’ve got a lot of green on the board in Asian equities and that’s good for risk-taking appetite,” said Sean Callow, a senior currency strategist at Westpac Banking Corp., Australia’s biggest lender by market value. “It would certainly fit into the yen weakness that’s been one of the biggest stories over the past month. That also works to the detriment of the dollar.”
The yen dropped to 125.42 versus the euro as of 7:51 a.m. in London from 124.65 late in New York yesterday. The dollar dropped to $1.2706 per euro from $1.2611. The U.S. currency declined to 98.69 yen from 98.84 yen.

Japan’s currency fell 1 percent to 63.04 versus the Australian dollar, and weakened 0.7 percent to 49.06 against the New Zealand dollar from late in New York yesterday.
The yen slid against 14 of the 16 most actively traded currencies after a Cabinet Office report today showed the leading index of business conditions fell to 77.1 in January from 80 in December, below the consensus forecast of 77.4 in a Bloomberg News survey. The coincident index, which shows current economic activity, dropped to 89.6 from 92.4.

http://www.bloomberg.com/apps/news?pid=20601083&sid=a300.7j5MLKo&refer=currency

Market Commentary

MARKET COMMENTARY on 10th March 2009

GBP/USD closed lower on Monday thereby renewing the decline off February's high. The low-range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are neutral signaling that sideways to lower prices are possible near-term. If March extends this week's decline, January's low crossing is the next downside target.

EUR/USD posted an inside day with a lower close on Monday as it consolidated some of last Friday's rally. The mid- range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are turning bullish signaling that a low might be in or is near. Closes above the reaction high crossing are needed to confirm that a short-term low has been posted. If March renews this year's decline, November's low crossing is the next downside target.

USD/CHF Closed higher on Monday as it consolidated some of last Friday's rally but remains below the 20-day moving average crossing. The low-range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near-term. Closes below the reaction low crossing would renew the rally off February's high.

USD/CAD closed lower on Monday and spiked below December's low crossing. The mid-range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are oversold but are neutral to bearish signaling that sideways to lower prices are possible near-term. Closes above the 20-day moving average crossing are needed to confirm that a short-term low has been posted.

USD/YEN closed higher on Monday ending a two-day short covering bounce off the retracement level of the August-January rally crossing. The high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are oversold but are turning neutral to bullish hinting that a short-term high might be in or is near. Closes below the 20-day moving average crossing are needed to confirm that a short-term high has been posted.