Yen, Swiss Franc Higher Vs. U.S. Dollar

Currency markets Thursday took on the profile of a risk-off day, though the correlation with other markets fell away as stocks rose across Asia.

The yen and Swiss franc edged higher vs. the greenback. The Australian dollar led declines, down 0.5% vs. the greenback as confidence about growth prospects was dented by faltering July export numbers. USD/JPY dropped as low as JPY84.08, while EUR/JPY traded JPY107.50-80 for most of the Asian session. EUR/CHF dropped to as low as CHF1.2955 as Swiss gross domestic product climbed more than expected in the second quarter.

EUR/USD jumped above $1.28 ahead of the European Central Bank meeting Thursday, while sterling came under pressure after poor house price data.

The Korean won led gains among emerging markets currencies after the International Monetary Fund suggested interest rates should go higher, and raised its 2010 growth forecast, while the government pledged to fight inflation. ZAR, PHP, PLN and RUB were among the gainers.

Asian stocks climbed across the region, buoyed by the strong U.S. ISM manufacturing report. The MSCI Asia Pacific index rose 1.1%, reaching the highest level in two weeks, while the biggest gainer in the region was Japan's Nikkei, up 1.5%. There were also advances in Hong Kong, Taiwan, Korea, Singapore and India.

Europe shares were lower and U.S. futures were down.

Bonds were mixed. Japanese bonds declined amid stock gains in the region -- the 10-year JGB yield rose 5 basis points to 1.11%. U.S. Treasuries were pretty steady with the two-year note yield at 0.5%, while the 10-year yield slipped 1 basis point to 2.57%. European bonds opened a touch lower, with Germany's 10-year bund yield up 1 basis point to 2.22%.

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