China Fears Send Yen Broadly Higher

Barbara Zigah

Safe haven demand once again pushed the Japanese Yen broadly higher after disappointing economic data out of China reinforced investors’ concerns that the Chinese economy, the second largest in the world, was on the verge of a slowdown. According to the data, exports dropped sharply in February resulting in a trade imbalance far greater than one that analysts had expected. Inflation data also surprised with both producer and consumer inflation missing their respective marks. While some analysts dismissed the readings saying that they could have been distorted by a Chinese holiday, most investors preferred to play it safe.

The AUD/USD was hit exceptionally hard as a result as Australia’s economy bears a direct link to the Chinese economy and tends to fluctuate dramatically whenever an economic disappointment occurs. The AUD/USD pair dipped from Friday’s $0.9065 to $0.9030 before creeping back to $0.9053. Meanwhile, the AUD/JPY fell at one point in the session to 92.92 Yen, a decline of 0.7%, before edging higher to 93.40 Yen. Both the Euro and the U.S. Dollar fell against the Yen as well, with the EUR/JPY pair trading at 142.94 Yen and the USD/JPY at 103.31 Yen.

Euro’s Gains Attributed to ECB Sentiment

The EUR/USD had moved away from Friday’s 2½ year high which occurred shortly after the release of unexpectedly upbeat NFP data which suggested that the Federal Reserve might continue its plans to taper QE. The pair steadied at $1.3874 but had briefly hit $1.3915 on Friday. The Euro had gained about 0.5% on the week against the dollar as investors took heart in the European Central Bank’s decision to maintain monetary policy even in spite of an outlook verging on deflationary.

Barbara Zigah

After working on Wall Street, Barb began her second career as a freelance writer at Daily Forex, where the CEO recognized fresh, untapped potential and was willing to give her a try. She’s never looked back. Since then, she’s worked steadily as a freelance writer and editor in the financial services and Forex-related industry.

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