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💎 Fed’s first rate cut since 2020 set to trigger market. Find undervalued gems with Fair Value See Undervalued Stocks
FOREX-Yen rallies as risk aversion intensifies, Aussie sinks
Published Aug 24, 2015 09:36
© Reuters. FOREX-Yen rallies as risk aversion intensifies, Aussie sinks
* Currency markets in risk-off mode on China growth worries
* Yen hits six-week high vs USD, two-year high on Aussie
* Euro climbs to two-month high vs USD
* Aussie under broad pressure
By Ian Chua
SYDNEY, Aug 24 (Reuters) - The yen climbed to a six-week peak against the dollar early on Monday and raced to a two-year high on its Australian peer as investors sought the safety of the Japanese currency on heightened risk aversion.
Worries about a slowing Chinese economy, and in turn global growth, flared up last Friday after a survey showed a further deterioration in China's manufacturing activity.
This was compounded by a steep drop in the Chinese share market, triggering a domino effect that saw European stocks and Wall Street suffer their biggest one-day drop in nearly four years.
The dollar slid as far as 121.17 yen JPY= from 121.96 late in New York on Friday, reaching a low last seen on July 9. The Australian dollar dropped below 88.00 yen for the first time since late 2013.
Investors were also forced to cut bearish positions in the euro, helping lift the common currency to a two-month high of $1.1395 EUR= . That saw the dollar index .DXY dip to a two-month low of 94.747.
Traders said weakness in the greenback also reflected doubts that the Federal Reserve will be able to hike interest rates next month.
"'Risk off' remains the dominant theme of currency markets, with JPY and EUR expected to continue to strengthen. Should the higher volatility persist, the AUD and NZD should start to markedly under-perform more," analysts at ANZ wrote in a note to clients.
The Aussie, often used as a liquid proxy for China plays, has started to come under pressure after managing to hold up remarkably well on Friday.
It was down 0.9 percent at $0.7251, nearing a six-year trough of $0.7217 set earlier in the month.
There is nothing in the way of market-moving data out of Asia on Monday, leaving the focus squarely on Chinese stocks. (Editing by Shri Navaratnam)
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