The Japanese Yen and Swiss Franc both firmed on Friday after an overnight surge of the safe haven currencies precipitated by growing concerns of a Chinese economic slowdown following the release of an unexpectedly weak factory output survey. Market analysts concur that any downturn of China’s economy has far reaching repercussions, especially among the emergent markets but also to trade-linked ones like Australia and New Zealand. Despite the move to safety, the Euro maintained gain it made during Thursday’s trading session which followed economic data that suggested that the Eurozone’s recovery is on track.
As reported at 12:24 p.m. (JST) in Tokyo, the USD/JPY struck a 2-week trough at 102.97 Yen before edging higher to 103.40 Yen. Meanwhile the USD/CHF touched on a 3-week low at 0.8964 Swiss Francs but later crept up to 0.8988 Swiss Francs. The EUR/USD pair traded at a 2-week peak of $1.3699 before dipping down to $1.3683, still a gain of 1.1% in the session; the Euro was helped by a survey of business activity which handily beat expectations with a rise in the reading to 53.2.
Chinese PMI Falls into Contractionary Territory
According to the HSBC Manufacturing PMI survey, the reading for China’s manufacturing sector dipped to 49.6 in January, below the 50.6 expected by analysts and falling below the 50.0 threshold which separates contraction from expansion. Emerging currencies and those which are linked to Chinese growth, as a result, came under significant pressure with many touching on record lows against the safe haven currencies. Similarly, the AUD/USD approached a 3-year trough and was recently trading at 0.8698.