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The yen fell to a 16-month low against the euro before data tomorrow that may show reduction in Japan's consumer prices, fanning speculation Japan's Prime Minister Shinzo Abe will push the central bank to raise cash infusion.
"The birth of Abe administration stimulating expectations in the market that deflation is over,'' said Kazuo Shirai, Union Bank NA trader in Los Angeles.'' Markets expect the government will clarify its commitment to bring the yen down.''
The Japanese currency touched 113.65 per euro, the weakest since August 4, 2011 prior to bidding to 113.60 as of 1:51 pm in Tokyo, down 0.3 percent from yesterday's close. This was 0.3 percent lower at 85.84 per dollar after touching 85.87, the level unseen since September 17, 2010. The euro was little changed at $ 1.3233.
Market News
Wall Street falls in a thin session, led by retail
Shares fell a third consecutive day on Wednesday, dragged lower by retail stocks after a report showed consumers spent less in the holiday shopping season than last year.
Trading was light, with a volume of 4.01 billion shares simply traded on the New York Stock Exchange, NYSE, Nasdaq and MKT, wellbelow this year's daily average of about 6.48 billion shares. The volume was the lightest day full day of trading so far in 2012. Many senior traders were still on vacation during this holiday shortened week and majorEuropean markets were closed for the day.
Many investors said concern about the "financial cliff" kept buyers away from stores, suggesting markets may struggle to get any land until the matter is resolved. Volatility index, or CBOE VIX, a favorite barometer of Wall Street investors concern rose 4.46 percent to close above 19 for the first time on November 7.
Among the strongest performers in 2012 advanced, a sign that the portfolio managers may engage in "window dressing", a practice where market participants to buy securities with a large profit to improve the appearance of their possessions before presenting results to clients. Bank of America Corp, which has more than doubled in 2012, added 2.6 percent to $ 11.54 on Wednesday.
Holiday-related sales were up 0.7 per cent from October 28 to December 24, compared with a 2 percent increase last year, according to MasterCard Advisors SpendingPulse. Morgan Stanley retail index skidded 1.8 percent, while the SPDR S & P Retail Trust slipped 1.7 percent.
"With hanging" financial cliff "over our heads, it was difficult to convince people to shop, and now it is difficult to convince investors that there is any reason to buy going into the end of the year," said Rick Fier, director of trading at Conifer Securities New York, which has about $ 12 billion in assets under management.
U.S. President Barack Obama is due to return to Washington on Thursday morning for a final effort to negotiate a deal with Congress to overcome a number of tax increases and cuts in public spending due to start next week, the so-called "financial cliff" many economists worry could push the U.S. economy into recession, if it enters into force.
Coach Inc fell 5.9 percent to $ 54.13 as the biggest decliner S & P 500, followed by Amazon.com, up 3.9 percent at $ 248.63, and Abercrombie & Fitch, from 3.5 per cent to $ 45.44. Ralph Lauren Corp, Limited Brands and Gap Inc and one of the largest outsider S & P 500.
Index Dow Jones Industrial Average slipped 24.49 points, or 0.19 percent, to 13,114.59 at the close. 500 Index Standard & Poor shed 6.83 points, or 0.48 percent, to 1,419.83. The Nasdaq Composite Index fell 22.44 points, or 0.74 percent, to 2,990.16.
JC Penney Co was a notable exception to the weakness in retail stocks, rising 4.4 percent to $ 20.75, as the biggest winner S & P 500. It was closely followed by Bank of America and Genworth Financial, each of which received almost 3 percent during the day.
"People want to show that they have their own names, as these, which makes them candidates for show" Prime, "said Wayne Kaufman, chief market analyst at John Thomas Financial in New York.
"Bank of America continues to go up, although it is overbought and we can expect a rollback at these levels. Nobody wanted it when it was under $ 10 per share, but they want it now."
S & P 500 fell 1.5 percent in the last three sessions, the worst three-day decline since mid-November. Dow Jones Transportation Average, seen as a proxy for economic activity, fell 0.6 percent.
The Republican plan, which failed to gain traction in the last week has caused S & P 500 in the last drops, highlighting the sensitivity of the market to the center of headlines about the budget negotiations.
In the last five trading days of the year and the first two of the next year, it is possible for "Santa rally" occur. Since 1928, S & P 500 by an average increase of 1.8 per cent during this period, and rose 79 percent of the time, according to PrinceRidge.
"While it could hardly be a budget deal at any point in time, no one wants to trade before this," said Fier Conifer in. "Investors can easily make up for any revenue when there is more action in 2013."
Data showed U.S. single-family home prices rose inOctober, reinforcing the view that the domestic real estate market is improving, as S & P / Case-Shiller composite index of 20 major cities rose 0.7 percent in October on a seasonally adjusted basis.
Decliners outnumbered advanced on the New York Stock Exchange in the ratio of 2 to 1, while on the Nasdaq, more than five stocks fell for every three that rose. Reuters.com
Currencies
Yen hits 2-year low on expectations of the new Japanese government
The yen reached a two-year low against the dollar on Thursday, reflecting expectations that the new government of Prime-MinisterShinzo Abe will push to weaken the Japanese currency and implement aggressive stimulus.
The dollar rose to a height of 85.84 yen on tradingplatform EBS, its highest level since September 2010. Last dollar was around 85.79 yen, up 0.2 percent from late U.S. trade on Wednesday.
The dollar is on a close above its 200-week moving average, currently at around 84.95 yen, the first time since the week ending December 23, 2007.
The yen was also down against the euro, touching its lowest level in nearly 17 months. The euro rose to a height of 113.605 yen, a strong level of the single currency against the yen since the beginning of August 2011.
Abe, who has threatened to revise the law to guarantee the independence of the Bank of Japan, if she refuses to set up 2 percent inflationtarget, appointed cabinet close allies on Wednesday.
"There seems to be broad agreement in the new government and its political alliances on the path to take. Most seem ready to support the call for Abe" bold monetary easing and inflation target of 2.0 percent for the Bank of Japan, "strategists Brown Brothers Harriman wrote in a note to clients.
New Finance Minister Taro Aso said on Thursday that Abe told him to put together a package of incentives without following the previously agreed cap on new bond issues.
New Economy Minister Akira Amari said Thursday the yen goes to the appropriate level with its recent easing, and that it is important to keep declining.
The Japanese currency is poised to fall by more than 11 percent against the dollar in 2012, the largest decline since 2005, with most of the move coming after Abe was elected leader of his Liberal Democratic Party in September.
"I'm still bullish on the dollar / yen is quite a bit," said a trader at a U.S. bank in Singapore.
"In this small market, I think anything can happen. But, of course, I would not go against the trend. Trend is quite clear on this point," he added.
One factor that could further weigh on the yen has the potential for currency hedging of non-Japanese investors with exposure to the yen assets such as Japanese stocks, he said.
"I think there will be some assessment of their hedging policies. I'm not sure that everything is fully hedged," a trader said.
Continuation of negotiations to resolve the U.S. "financial cliff" The budget impasse has strengthened the dollar as safe-haven play, how was it possible that Congress will not be able to reach an agreement before January 1 toavert $ 600 billion spending cuts and tax increases that economists fear could disrupt the economy U.S. back into recession.
In a sign that there may be a way to break the deadlock in Congress, Republican House Speaker John Boehner called Democratic-controlled Senate to act, to move away from the edge of the cliff andoffered, at least, to consider any bill upper house production.
Euro traded at $ 1.3233, down 0.1 percent from late U.S. trade, but lower than the 8-month high of $ 1.33085 hit last week.
The dollar index was 79.586, staying above a two-month minimum of 79.008 hit last week. Reuters.com
