Chinese Yuan Pares Some Recent Gains Against Dollar

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The Chinese yuan pared some of its early Tuesday Asian session gains against the US dollar.

The yuan is currently trading at 6.8101 per dollar, compared to an early Asian session's fresh post-revaluation high of 6.7960.

The yuan's surge in early trading came after the People's Bank of China set the daily reference rate at 6.7980, signaling the central bank could allow the yuan to rise further. It was the first time for the yuan's daily rate to hit the 6.7 level since its July 2005 revaluation. (Provide by RTTNews)

Yen Climbs To 1-week High Against Euro

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The yen that traded at a 5-day high against the euro in early Tuesday Asian deals rose to a 1-week high in the latter part of the session after a report showed that the Japanese economy is expected to grow much faster than initially estimated in the current fiscal year.

The yen also showed strength against the currencies of U.S., U.K. and Switzerland amid the report. The yen continued to trade at a 5-day high against the pound.

The Cabinet Office said today that growth is now seen at 2.6% in the year to March 2011, up from the previous projection of 1.4%. For the fiscal 2011/12, the government estimate 2% growth.

The upward projection was driven by rise in exports, especially to Asia. A recovery in capital spending as well as improving corporate profits also supported the revision. Further, consumer prices are forecast to stop declining in fiscal 2011.

A decline in most Asian stocks also supported the lower-yielding Japanese currency.

Most Asian stocks dropped today as investors going in for some profit taking after recent gains.

Japan's Nikkei 225 index fell 1.2%, New Zealand's NZX 50 index lost 0.5%, South Korea's Kospi declined 0.5%, Australia's S&P 200 index slipped 1.2% and the All Ordinaries index lost 1.1%.

However, the stock markets in China and Hong Kong are trading flat.

At 2:10 am ET Tuesday, the yen soared to a 5-day high of 113.69 against the pound, compared to yesterday's closing value of 134.39. As of now, the pound-yen pair is worth 113.90. If the yen advances further, it may likely target the 130.5 level.

The yen jumped to a 1-week high of 111.56 against the euro by about 2:05 am ET Tuesday. The euro-yen pair that closed yesterday's trading at 112.17 is currently worth 111.70. On the upside, 109.0 is seen as the next target level for the Japanese currency.

The yen strengthened against the US dollar and the Swiss franc in late Asian deals on Tuesday. The yen is presently worth 90.80 against the dollar and 81.70 against the franc, compared to yesterday's close of 91.06 and 81.95, respectively. The next upside target level for the yen is seen at 90.35 against the dollar and 80.5 against the franc.

Looking ahead, the German IFO business climate index for June and the Euro-zone current account for April are expected in the upcoming hours.

The U.S. house price index for April and the existing home sales for May are slated for release in the New York morning.

The Federal Reserve Open Market Committee is scheduled to meet on Tuesday for a 2-day meeting. The FOMC is due to make an announcement regarding its near-term direction of monetary policy at 2:15 pm ET on Wednesday. (Provide by RTTNews)