(Bloomberg) -- The yen weakened as the Nikkei 225 Stock Average broke above 20,000 for the first time since 2015 following a record close in U.S. equities, sapping demand for haven assets.
Pullbacks in the dollar-yen were shallow and Tokyo sales desks made note of a dilution in corporate sell orders near 111.50, which had capped advances since May 29, according to Asia-based FX traders who are not authorized to talk to the media. The greenback fell against most of its Group-of-10 peers as traders adjusted their positions ahead of U.S. non-farm payroll data.
"The higher dollar-yen is encouraging a further rally in the Nikkei which started with general risk-on sentiment," according to David Forrester, a foreign-exchange strategist at Credit Agricole CIB in Hong Kong. "Although a June Fed hike is heavily priced, it's pretty flat beyond that. Stronger earnings data would lead the market to price further rate rises after June and lead to a more sustainable dollar rally.”
The Treasury curve flattened in Asia after data from the ADP Research Institute Thursday showed U.S. private payrolls rose 253,000 in May, beating estimates. U.S. non-farm payrolls probably rose 182,000 in May from 211,000 in the previous month, a Bloomberg survey showed. Fed fund futures based on effective rate put an 88 percent probability the U.S. central bank will raise rates in June.
- USD/JPY climbs 0.2% to 111.62 versus 111.31/68 range
- Leveraged and macro buying seen on the way up, bids from latter near 111.40: traders
- FinMin Aso says no change to Japan's fiscal 2020 primary surplus goal
- Nikkei 225 index up 1.3% to 20,113
- AUD/USD gains 0.2% to 0.7389 versus 0.7373/90 range
- Spot recovered from session low after local 10-year yields outperform their U.S. counterparts to move back toward a 20bps differential from 16bps earlier
- Option related bids seen off A$1.19b of put strikes at 0.7375 expiring Tuesday
- Bloomberg dollar index steady at 1,201.35; brent crude slips 0.4%
- 10-year Treasury yield is steady at 2.22%
To contact the reporter on this story: Michael G. Wilson in Sydney at mwilson176@bloomberg.net.
To contact the editors responsible for this story: Tan Hwee Ann at hatan@bloomberg.net, Patricia Lui, Nicholas Reynolds
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