A Safe-Haven, Japanese Yen Slides as Market Focus Shifts to Chinese PMI Numbers, AUDNZD Regains

Safe-haven currency, Japanese yen always resorted to in times of political and economic uncertainties touched down while AUD and NZD took a reversal trend as market focus shifts to Chinese PMI numbers.

Against a basket of currencies, the JPY ranged at a lower price. The JPY, when paired with the USD, had a slight rebound to stand at 110.50 as earlier projected.

GBP/JPY pair came steadily after rebounding from a previous market price of 126.54 while targeting line resistance at 143.65.

While resistance stands at 121.46 for EUR/JPY pair, analysts are uncertain if the pair would break trend line resistance in conformity with the upward trend as seen in with other Yen candlesticks.

On the other end, USD had a slight rebound to subside later, as seen in its pairings against other currencies. Eyes are on EUR/AUD and AUD/USD pairs to determine the market movements of the Dollar.

Due out later today is additional manufacturing stats, in particular, US ISM manufacturing numbers, which would influence the market movements for the Dollar and other riskier assets this December.

Out already is the China Caixin Manufacturing PMI which had a 0.1 increase from the previous value of 51.7 surpassing the prediction of 51.4.

Chinese PMI manufacturing index as recounted officially had an increase of 1.9 as against the previous value of 49.3 in November, against a forecast of 49.5. The PMI Non-Manufacturing index climbed to 54.4, from October’s value of 52.8 against a forecast of 53.1. An analyst sees that investments in the manufacturing sector have steadied at a low level for a while which may be due to the ongoing trade war between the US and China.

Japanese PMI manufacturing figures stood at 48.9 in November, slightly up by 0.5 from October. Since April 2019, it had maintained less than 50 showing a downtrend continuation in the manufacturing sector. Japanese capital spending increased by 7.1 percent in the 3rd quarter, as against a forecast of 5.1 percent.

Unfavorable economic stats were released from Australia as seen in the AiG manufacturing index which touched a three year low of 48.1 in November, spiraling down from a previous figure of 51.6 showing a downturn in the manufacturing sector.

The released stats from Australia also show a drop in company gross operating profits and building permits. TD securities inflation held steady in November.

The stats released from the New Zealand Treasury showed that economic growth fell below that was predicted. The trade index also climbed by 1.9 percent in the 3rd quarter.

In the Asian stock market, Nikkei tops the lead at 1.11% while others range less than 0.5%. Japanese JGB yield rose to 0.0214 at -0.060 which also might have undermined the safe-haven JPY.

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A Bullish Trend on the Yen as Uncertainties Mask Trade Talks, NZD Up, AUD Down

The trade war which had lingered for over 16 months between the US and China had spurred up a little glimpse of positivity in the past weeks when reports filtered in that both countries were about removing the tariffs slapped on their respective goods.

In this light, it seemed as if investors had gotten at ease in taking the risk, thereby undermining the safe-haven currencies, Japanese Yen and Swiss dollar.

For more than five weeks, the positivity loomed around the US dollar and it rose up against a basket of currencies.

Events took a turn when the US revealed that it wasn’t removing certain tariffs, thereby spurring up uncertainty as investors weren’t sure when the preliminary phase deal will be signed.

Investors Seek Solace in Safe-Haven Currencies
Investors were therefore prompted to take solace in safe-haven currency, Japanese yen as it rose up as against the previous week of 108.785 versus the dollar.

The yen also seemed to have been propped up by the unrest in Hongkong and also unfavorable economic stats from the Eurozone and China.

Last week, economic stats released saw China record a lower industrial production, lower GDP figures for Japan and Germany while Australia’s employment figures slipped by close to 19,000 as against an increase forecasted, being the largest drop recorded since 2016. Bearish sentiments also forced the Australian government bond yield spanning over ten years to record a week low.

Aussie closed the previous week down at 0 .6821 versus the dollar, standing at a negative of 0.56%. The speculation that the reserve bank of Australia might embark on an interest rate reduction due to the employment stats also undermined the AUD.

On the other end, NZD experienced a bounce as the reserve bank of new Zealand held steady its interest rate at a percent. Analysts had forecasted a reduction in the OCR (official cash rate).

The NZD closed the previous week at 0.6402 versus the dollar with a market gain of 1.19%. RBNZ’s stance came as a surprise to investors as the apex bank now presented an attractive growth outlook. Speculations are high for a likely interest rate cut in February or May. The RBNZ also mentioned that it may pump more liquidity into the economy if necessary.

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