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5/2/2008 4:16:24 AM The Japanese yen weakened against its major counterparts in early deals on Friday as investors returned to so-called carry trades. In carry trade, investors get funds in a country with low borrowing costs and invest in one with higher returns, earning the spread between the two. The risk is currency fluctuations erase profits between the two rates.

The yen declined to a new multi-month low of 105.03 against the dollar by about 2:55 am ET Friday. The pair closed yesterday`s New York session at 104.47.

The yen touched a low of 162.35 versus the euro at 3:00 am Eastern Time Friday. The yen that hit a 15-day high of 160.64 per euro yesterday morning closed the day`s deals at 161.61.

German retail sales in real terms dropped 0.1% month-on-month in March, while expectation was 0.6% rise, a preliminary report from the Federal Statistical Office showed today. On an annual basis, retail sales were down 6.3%, much faster than the estimate fall of 2.3%. In nominal terms, retail sales slipped 3.7% year-over-year.

French producer prices rose 0.5% month-on-month in March, in line with expectations. In February, producer prices had climbed 0.4%. Year-on-year, producer prices were up 5.2% in March, slightly more than the 5.1% rise expected.

During early trading on Friday, the yen fell to 100.14 against the Swiss currency. This may be compared to a 7-week high of 99.10 hit yesterday morning. The franc-yen pair was worth 99.64 at Thursday`s close.

Swiss SVME Purchasing Managers` Index, or PMI, edged up 1.4 points to 56.7 points in April, Credit Suisse reported today. Economists had expected the index to stand at 55. This is the first increase since the beginning of this year. In March, the index recorded a reading of 55.3 and in the previous year, it was 62.2.

Against the pound, the Japanese currency weakened to a 4-day low of 208.10 by about 3:45 am ET Friday, compared to 206.27 hit late Thursday in New York.

Latest report from the Halifax showed that the house prices in UK fell 0.9% on a year-on-year basis in April. On a monthly basis, the house prices declined 1.3%. The Halifax said that more interest rate cuts are expected from the Bank of England over the coming months due to signs of expected economic slowdown.

The US April unemployment rate, change in Nonfarm payrolls and the factory orders report for March are expected to drive deals in the New York session. Copyright © 2007 RTTNews.com. All Rights Reserved.