The Japanese Yen has risen against the US Dollar and other peers as the latest CPI data out of China showed that manufacturing in the world’s second largest economy expanded at a slower pace than economists had expected.
According to the flash HSBC Purchasing Managers Index Growth in China’s massive factory sector declined in April due to a fall in new export orders. The disappointing data has raised fears that the global economy is slowing down once again and led to investor’s shelter in the safe-haven currencies of the US Dollar and Japanese Yen.
As a result the Yen made gains against all of its peers and rose further against the Euro following data that showed that manufacturing in the Eurozone’s largest economy fell. HSBC’s preliminary purchasing managers’ index came out at 50.5 for April compared with a final reading of 51.6 for March. A score above 50 indicates an expansion in manufacturing activity.
The Chinese data saw both the New Zealand and Australian Dollar’s decline against the Yen.
“We’re not seeing a sustained period of recovery in the China data, which is a bit of a concern,” said David Forrester, a senior vice president for Group of 10 foreign-exchange strategy at Macquarie Bank Ltd. in Singapore. “It’s a reflection of weaker global growth, and it’s not good news for the Aussie or the kiwi.”
The next bout of movements for the Yen now depends on whether the Bank of Japan’s aggressive monetary easing will prompt Japanese Investors to increase their purchases of higher-yielding overseas assets.
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