Forex: Yen slips as China
PMI supports risk appetite, Aussie edges up
Send a link to a friend
[May 22, 2014] By
LONDON (Reuters) - Firmer
data out of China dominated major currency markets on
Thursday, provoking a recovery for the Australian dollar
and eating into yen gains this week against the U.S.
China's factory sector, while still contracting slightly, turned in
its best performance this year in May, holding out the hope of more
revenues for an Australian economy which provides much of its raw
materials as well as offering a filup to the broader global economic
Peak to trough, the Aussie gained as much as 1 percent against the
yen - seen as a safe haven for money in tougher economic times. The
Japanese currency fell back around a third of a percent against the
"It's still only one number and in general the Chinese economy isn't
really accelerating, but the data today has given the Aussie a bit
of a boost," said Paul Robson, strategist with RBS in London.
The Aussie settled somewhat early in the European day to trade at
One faller this week has been the Swiss franc, with talk in the
market swirling on Wednesday of a big order for dollars just as
Credit Suisse announced it will pay $2.5 billion in penalties for
helping Americans evade taxes.
The dollar traded just off three month highs of 0.89655 francs on
"There was a big order that went through yesterday and just
generally if you believe the dollar is going to gain then
dollar/franc is a good way to go," said one London-based dealer.
European purchasing manager surveys were a slight positive for the
euro, which has traded in very tight ranges this week.
The single currency's fall over the past fortnight has stalled,
blocked on one side by the capital inflows which have benefited it
this year and on the other by the threat of a cut in official
interest rates next month.
The euro traded flat for the day at $1.3683.
[to top of second column]
The yen had hit 3-1/2-month highs against the dollar on Wednesday
but the survey of Chinese factory activity added to resistance to
further gains around 100.80 yen, pushing it down to 101.55 yen in
early trade in Europe.
"The dollar has averted a drop to levels below 100 yen for now,"
said Satoshi Okagawa, senior global markets analyst for Sumitomo
Mitsui Banking Corporation in Singapore.
Another factor in the yen's retreat was the recovery of U.S. 10-year
Treasury yields, which rose to 2.557 percent, compared with a trough
of 2.473 percent set last week which was the lowest since late
Speculation about the possibility of any imminent ramp-up in the
Bank of Japan's monetary stimulus has receded, but there are also
signs that Japanese investors are building up their investments in
Japanese stocks and foreign bonds.
(Additional reporting by Masayuki Kitano in Singapore; Editing by
[© 2014 Thomson Reuters. All rights
Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.