Asian Session – Yen gains on negative risk sentiment as Chinese slowdown feared
March 12, 2014 7:48 am
The yen was strong during Wednesday’s Asian trading, as fears about Chinese growth as well as geopolitical uncertainty in Ukraine were the main themes depressing sentiment. This was in the absence of significant economic data from other major economies.
The dollar dropped below the 103 mark against the yen at 102.9, whereas euro / yen also backed down to 142.57.
Euro / dollar was range-bound during the Asian session between 1.3850 and 1.3860, as the pair did not manage to get above 1.39 the previous day.
The release of much weaker-than-expected export figures from China this week as well as some weak business survey data, have sparked concerns that the world’s second largest economy could slow down. In addition, there have been concerns about negative developments in the country’s financial system following the first large profile bond default in China, Chaori Solar.
This in turn has hurt the price of copper, which is usually a reliable indicator of underlying economic activity. In addition, copper is purchased mainly using credit and the purchased metal also serves as collateral, which hurt it even more on fears that liquidations will follow potential defaults of buyers. The price of the metal fell to its lowest since 2009 in Shanghai.
On a more positive note, according to a source quoted by Reuters, the Chinese central bank stands ready to reduce the banks’ reserve ratio if there is a slowdown in growth.
Precious metal gold on the other hand challenged its 4 ½ – month high of 1362 – an important technical level- as it benefited from its status as a safe haven.
As China is Australia’s main export destination – particularly for minerals like iron ore and copper- the Australian dollar continued its drop against its US counterpart to 0.8955.
Following a weak session for stocks overnight in Wall Street, Japan’s Nikkei fell more than 2%, leading the region’s indices lower.
No major economic news are expected today with the exception of Eurozone industrial production for January, expected to show a 0.5% month-on-month increase.
The yen was strong during Wednesday’s Asian trading, as fears about Chinese growth as well as geopolitical uncertainty in Ukraine were the main themes depressing sentiment. This was in the absence of significant economic data from other major economies.
The dollar dropped below the 103 mark against the yen at 102.9, whereas euro / yen also backed down to 142.57.
Euro / dollar was range-bound during the Asian session between 1.3850 and 1.3860, as the pair did not manage to get above 1.39 the previous day.
The release of much weaker-than-expected export figures from China this week as well as some weak business survey data, have sparked concerns that the world’s second largest economy could slow down. In addition, there have been concerns about negative developments in the country’s financial system following the first large profile bond default in China, Chaori Solar.
This in turn has hurt the price of copper, which is usually a reliable indicator of underlying economic activity. In addition, copper is purchased mainly using credit and the purchased metal also serves as collateral, which hurt it even more on fears that liquidations will follow potential defaults of buyers. The price of the metal fell to its lowest since 2009 in Shanghai.
On a more positive note, according to a source quoted by Reuters, the Chinese central bank stands ready to reduce the banks’ reserve ratio if there is a slowdown in growth.
Precious metal gold on the other hand challenged its 4 ½ – month high of 1362 – an important technical level- as it benefited from its status as a safe haven.
As China is Australia’s main export destination – particularly for minerals like iron ore and copper- the Australian dollar continued its drop against its US counterpart to 0.8955.
Following a weak session for stocks overnight in Wall Street, Japan’s Nikkei fell more than 2%, leading the region’s indices lower.
No major economic news are expected today with the exception of Eurozone industrial production for January, expected to show a 0.5% month-on-month increase.
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