EU session review: Yen, Dollar strengthen on stock declines

Data released:
08:30     UK     CIPS manufacturing index (April)    54.6    57.5    57.1
09:00     EU(17)     PPI (March)    0.7%    0.4%    0.8%
09:00     EU(17)     PPI (March) Y/Y    6.7%    6.4%    6.6%
10:00     UK     CBI retail sales volume balance (April)    21%    18%    15%

The yen and dollar rose against most major counterparts as stocks fell and concern about reprisal attacks following the death of Osama bin Laden boosted demand for the relative safety of the Japanese and U.S. currencies.
“There seems to be worries over retaliation terrorist attacks,” said Satoshi Okagawa at Sumitomo Mitsui Banking Corp.. “There’s risk aversion, with the yen and the dollar being bought.”
The yen reached the strongest level in almost a week versus the dollar as Asia’s benchmark stock index slid to its biggest loss in three weeks.
Financial markets in Japan are shut today for a holiday.
The Australian and New Zealand dollars fell as lower commodity prices damped demand for the nations’ assets.
“With a commodity unwind, commodity currencies will come under pressure,” said Tim Kelleher, vice-president of institutional banking and markets at Commonwealth Bank of Australia.
The Aussie held its losses after the Reserve Bank of Australia left the overnight cash rate target at 4.75% at a policy meeting today.
Canada’s currency strengthened as Prime Minister Stephen Harper won a return to office with a majority government.
Harper’s party was ahead or leading in 167 of 308 districts, according to results posted on Election Canada’s website. The New Democratic Party was leading in 102 seats and will form the official opposition, followed by 34 for the Liberal Party. The separatist Bloc Quebecois led in three seats.
The pound dropped as an index of U.K. manufacturing growth fell. Markit Economics and the Chartered Institute of Purchasing and Supply index fell to 54.6 in April from 56.7 in March.

EUR/GBP failed to challenge $1.4850 to spur short-adjustment. Rate fell to the lows around $1.4752. Later rate was back to $1.4774.

GBP/USD fell after the weak data from $1.6650 to $1.6460. But currently rate tries to recover and holds around $1.6480.

USD/JPY weakened to Y80.80 after lasting consolidation within the Y80.90/81.10 range.

US data includes domestic-made light vehicle sales, which are forecast to rise to a 9.9 million annual rate in April after falling slightly in March. At 1400GMT US factory new orders are expected to rise 2.0% in March.