Yen Falls Amid Risk-on Mood

(RTTNews) - The Japanese yen weakened against other major currencies in the European session on Wednesday, as European shares traded higher after Ukraine signaled its readiness to accept a U.S. proposal for an "immediate, interim 30-day ceasefire" with Russia, and the European Union announced retaliatory tariffs on U.S. imports of steel and aluminum.

"A while ago, Ukraine has agreed to the ceasefire. Now we go to Russia and hopefully President Putin will agree to it also," U.S. President Trump said soon after the Jeddah announcement.

In economic news, data from the Bank of Japan showed that the producer prices in Japan were flat on a seasonally adjusted monthly basis. That beat forecasts for a decline of 0.1 percent and was down from 0.3 percent in January.

On a yearly basis, producer prices rose 4.0 percent, in line with forecasts and easing from 4.2 percent in the previous month.

The export price index was up 0.5 percent on month and 1.2 percent on year, the central bank said, while the import price index added 0.5 percent on month and sank 1.6 percent on year.

Data from the Ministry of Finance showed that the confidence among Japanese large companies declined in the first quarter. The business survey index for all industries fell to 2.0 in the first quarter from 5.7 in the preceding period.

Sentiment among manufacturers declined more sharply with the index falling to -2.4 from 6.3 in the fourth quarter. At the same time, the index for non-manufacturing dropped to 4.1 from 5.4 in the prior quarter.

Meanwhile, Bank of Japan Governor Kazuo Ueda said recent rises in bond yields were a natural reflection of market expectations of future interest rate hikes.

In the European trading today, the yen fell to nearly a 1-1/2-month low of 162.06 against the euro and a 5-day low of 168.40 against the Swiss franc, from early highs of 161.58 and 167.37, respectively. If the yen extends its downtrend, it is likely to find support around 166.00 against the euro and 169.00 against the franc.

Against the pound and the U.S. dollar, the yen slid to 6-day lows of 192.97 and 148.65 from early highs of 191.63 and 148.04, respectively. On the downside, 194.00 against the pound and 151.00 against the greenback are seen as the next support levels for the yen.

Against the Australia and the New Zealand dollars, the yen slipped to 5-day lows of 93.57 and 84.95 from early highs of 93.00 and 84.34, respectively. The yen may test support near 95.00 against the aussie and 86.00 against the kiwi.

The yen dropped to a 2-day low of 102.93 against the Canadian dollar, from an early high of 102.39. The next possible downside target for the yen is seen around the 104.00 region.

Looking ahead, U.S. MBA mortgage approvals data, U.S. CPI data for February and U.S. EIA crude oil data are slated for release in the New York session. At 9:45 am ET, the Bank of Canada (BoC) is set to announce its interest rate decision. The central bank is expected to lower its interest rates by 25 bps to 2.75%.

At 10:30 am ET, the BoC Governor Tiff Macklem will speak at a press conference, following the rate announcement.