Yen Rises on Concern U.S. Stress Tests May Show Crisis Not Over

April 22 (Bloomberg) -- The yen rose against all 16 of the most-active currencies on speculation stress tests on the largest U.S. banks will show additional loan losses, boosting demand for the yen as a refuge from the global financial crisis.

Japan’s currency also advanced after a government report showed a slump in the nation’s exports slowed in March, ending a four-month streak of record drops and adding to signs the recession may have started to ease. Australia’s dollar slid against the greenback and the yen after a report showed the nation’s inflation rate fell to an 18-month low, giving policy makers more room to cut interest rates.

“Investors remain averse to taking on risk amid lingering worries over the financial turmoil,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. The yen was bought because it is a “safe-haven” currency, he said.

The yen climbed to 126.99 per euro as of 7:55 a.m. in London from 127.81 in New York yesterday, when it reached 126.09, the highest level since March 16. Japan’s currency advanced to 98.22 against the dollar from 98.73.

The dollar was at $1.2931 against the euro from $1.2948 in New York yesterday. It touched $1.2889 on April 20, the strongest since March 16.

Australia’s dollar declined to 69.20 U.S. cents from 71.14 cents in New York yesterday, and dropped to 69.20 yen from 70.24 yen. New Zealand’s dollar fell to 55.77 cents from 56.40 cents, and weakened to 54.58 yen from 55.66 yen.

The British pound fell to $1.4609 versus the British pound from $1.4673 before Chancellor of the Exchequer Alistair Darling delivers today a U.K. budget with what may be the biggest deficit on record.

Market Commentary

MARKET COMMENTARY ON 22ND APRIL 2009

GBP/USD closed higher due to short covering on Tuesday as it consolidated some of this month's decline. The mid-range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI remain neutral to bullish signalling that sideways to higher prices are possible near-term. Closes above the 20-day moving average crossing would temper the near-term bullish outlook.

EUR/USD closed higher due to short covering on Tuesday as it consolidated some of this month's decline. The mid-range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI remain neutral to bullish signalling that sideways to higher prices are possible near-term. Closes above the 20-day moving average crossing would temper the near-term bullish outlook. closed higher due to short covering on Tuesday as it consolidated some of this month's decline. The mid-range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI remain neutral to bullish signalling that sideways to higher prices are possible near-term. Closes above the 20-day moving average crossing would temper the near-term bullish outlook.

USD/CHF closed higher due to short covering on Tuesday as it consolidated some of this month's decline. The mid-range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI remain neutral to bullish signalling that sideways to higher prices are possible near-term. Closes above the 20-day moving average crossing would temper the near-term bullish outlook.

USD/JPY closed lower on Tuesday as it extends the decline off March's high. The low-range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI remain bearish signalling that sideways to lower prices are possible near-term. If it extends today's decline, the reaction low crossing is the next downside target. Closes above the 20-day moving average crossing are needed to confirm that a short-term low has been posted.