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Yen and franc broadly high against dollar, boosted by safe-haven demand

January 24, 2014

The yen and Swiss franc kicked of 2014 on a solid footing, holding firm against the U.S. dollar on Friday as worries about a slowdown in China , the world's second largest economy spurred demand for safe haven currencies. Risk sentiment soured after weak Chinese manufacturing data pointed to a mild slowdown in 2014. China's HSBC flash Chinese Purchasing Managers' Index (PMI) dropped to a six-month low of 49.6 on Thursday. The Japanese yen is the best performer among its major peers this year, rising against the dollar after sliding in 2013. As of 12:55 GMT +2, the USDJPY pair extended losses in European session trading at 102.636 after falling to a session low 102.518. Yen is still consolidating; price may move downwards to break support level of 101.60 and then continue falling down. As well, the USDCHF pair dipped for a second day on Friday, extending losses set in the previous session after weak U.S. data. The pair is currently trading at 0.89593 francs after falling to a session low of 0.89512. In contrast, the euro gave up some ground on Friday with the dollar edging up from three-week low set in the previous session, underpinned by increased speculations the U.S. Federal Reserve will continue to scale back its massive bond purchase program in its meeting next week. The dollar appreciated 0.12 percent to trade at $1.36740 in London after falling to a low $1 .36637and hitting a session high of $1.37044 . The pair started the day lower at $1.36939 . Technically, although the greenback dropped briefly earlier in the day, the index found renewed buying interest and has rebounded against the euro. The pair is likely to find resistance at $1.3700 , breaking above that level today could strengthen the possibility of an upside move. Aussie Hits Fresh 3-1/2-year low on Ridout Comments The Australian dollar dropped sharply, hitting a 3-1/2-year low against the U.S. dollar on Friday after Reserve Bank of Australia board member Heather Ridout said had not fallen enough and that Aussie dollar trading at 80 U.S. cents would be a "fair deal" for the economy. The Aussie dollar was the world`s worst-performing major currency in 2013, after year of gains against the dollar. Earlier this month, it touched a low against the U.S. currency not seen since July 2010 . The AUDUSD pair fell sharply by 1.20 percent against the dollar to trade at $0.86630 after starting the day at $0.89100 .The pair so far hit a session low of $0.86596 . The pair will be facing support at 0.82710; a break below that level would be bearish sign for the currency. The RBA has repeatedly indicated it favors a weaker currency to help ease pressures on trade-sensitive sectors of the economy, though its fall is also generating domestic inflation pressures that could complicate the policy outlook. The New Zealand dollar extended losses for a second day on Friday; hit by speculation the Reserve Bank of New Zealand (RBNZ) could hike interest rates in its policy-setting meeting due next week. The NZDUSD pair is currently trading at $0.82235 after opening at $0.83012 .

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Source: Financial Markets

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