Yen, Swiss Franc Lose Ground

More strong economic news from Asia improved the mood in the financial markets, and gains were seen for risk assets and currencies, with the Japanese yen and Swiss franc losing ground vs. the majors.

Chinese manufacturing accelerated more than expected, Australia's economic growth quickened to the fastest pace in three years in the second quarter, again beating expectations, and South Korean exports grew for the 10th straight month. The Australian dollar led gains among the majors, up more than 1% vs. the U.S. dollar to climb through the A$0.90 barrier.

EUR/USD clambered back up through $1.27, while EUR/JPY rose to trade above JPY107 and USD/JPY traded around JPY84.50. Cable broke through $1.54, and EUR/CHF was up through CHF1.29. India said manufacturing slowed in August, while German retail sales unexpectedly declined, reinforcing the sense that the German economy has peaked. Emerging markets currencies gained across the board, led by the Korean won after the export data. It was followed higher by PLN, IDR, MYR and PHP.

Most benchmarks in Asia gained after the news from Australia and China. The MSCI Asia Pacific index rebounded from its 2.2% decline last month to post a 0.8% advance. Japan's Nikkei climbed 1.2%, and there were gains in Taiwan, South Korea, Australia, Hong Kong, India and Singapore.

European shares rose and U.S. futures were trading higher.

Bonds fell back as riskier assets came into vogue. Japanese 10-year JGB yields climbed back above the 1% mark, up 6 basis points to 1.015%. European bonds opened lower, with Germany's 10-year bund yield up 2 basis points to 2.135%. Periphery spreads came in a touch.

U.S. Treasuries fell back ahead of the announcement of three debt sales next week. The 10-year yield rose 3 basis points to 2.5% after dropping 18 basis points over the past two days.

>To order reprints of this article, click here: Reprints