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Yen Climbs Amid Risk Aversion

19.10.16 11:48

CANBERA (dpa-AFX) - The Japanese yen drifted higher against its major counterparts in early European deals on Wednesday amid risk aversion, as an unexpected slowdown in China's industrial output offset optimism over in-line GDP figures, and investors became cautious ahead of the third and final U.

S. Presidential debate and the European Central Bank monetary policy decision due tomorrow.

Recent round of China economic data offered a somewhat mixed update on the economy, with the economy expanding 6.7 percent in the third quarter and retail sales rising 10.7 percent in September, while the industrial output grew slowly to 6.0 percent from last year.

Policy makers at the ECB gather for a 2-day meeting in Frankfurt today, with investors awaiting to see whether the central bank will continue to buy ¤80 billion a month of mainly government bonds until at least March.

The Federal Reserve releases its Beige Book survey of regional conditions later in the day, while Republican candidate Donald Trump and Democratic nominee Hillary Clinton will face-off at the University of Nevada, in Las Vegas, for the last time before the Presidential elections in November 8.

The debate comes as opinion polls point to a growing lead to Clinton over his rival Trump ahead of the next month's vote.

In economic news, data from the Ministry of Economy, Trade and Industry showed that Japan's all industry activity expanded for the third straight month in August.

The all industry activity index grew 0.2 percent on a monthly basis in August, the same rate as registered in July and matched economists' expectations.

The currency showed mixed performance in the Asian session. While the yen held steady against the euro and the franc, it rose against the greenback and the pound.

The yen advanced to a 6-day high of 103.41 against the greenback, 8-day high of 104.48 against the Swiss franc and more than a 2-week high of 113.63 against the euro, off its early lows of 103.95, 105.01 and 114.16, respectively. If the yen extends rise, it may challenge resistance around 102.00 against the greenback, 102.00 against the franc and 112.00 against the euro.

The yen edged up to 126.97 against the pound, 79.27 against the aussie and 74.44 against the kiwi, from its previous lows of 127.89 and 79.83, and a 5-week low of 75.06, respectively. The next possible resistance for the yen may be found around 122.5 against the pound, 78.00 against the aussie and 73.00 against the kiwi.

Rebounding from an early low of 79.34 against the loonie, the yen firmed to a 5-day high of 78.82. The yen is seen finding resistance around the 76.00 region.

Looking ahead, U.S. housing starts and building permits, both for September, and U.S. crude oil inventories data are slated for release in the New York session.

At 8:45 am ET, Federal Reserve Bank of San Francisco President John Williams is expected to speak before the "Improving Diversity in the Financial Services Industry - An Holistic View" conference hosted by the Global Interdependence Center, in New Jersey.

At 9:15 am ET, U.K. Finance minister Philip Hammond is sheduled to deliver a speech in parliament, in London.

At 9:30 am ET, European Parliament's Brexit negotiator Guy Verhofstadt is expected to speak at conference on "Future of EU budget, reform of EU institutional set-up" in Brussels.

The Bank of Canada's interest rate decision is due at 10:00 am ET .The economists expect the bank to hold rates at 0.50 percent

Subsequently, the Bank of Canada Governor Stephen Poloz and Senior Deputy Governor Carolyn Wilkins will hold a press conference following the bank's interest rate decision and release of its monetary policy report at 11:00 am ET in Ottawa.

At 1:00 pm ET, Bank of England Chief Economist Andy Haldane is expected to speak on "QE - The story so far" at Cass Business School, in London.

At 1:30 pm ET, European Central Bank board member Daniele Nouy is expected to speak at the European Financial Roundtable organised by Deutsche Bank in Frankfurt.

At 2:00 pm ET, Federal Reserve issues the Beige Book of economic condition in Washington.

At 4:15 pm ET, Bank of Canada Governor Stephen Poloz and Senior Deputy Governor Carolyn Wilkins will testify before the Senate Standing Committee on Banking, Trade, and Commerce, in Ottawa.

Copyright RTT News/dpa-AFX



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