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FOREX-Yen shines vs dollar, euro on perceived safe-haven appeal

Published 08/03/2016, 02:28 pm
Updated 08/03/2016, 02:30 pm
© Reuters.  FOREX-Yen shines vs dollar, euro on perceived safe-haven appeal
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* Disappointing China trade data heightens global demand concerns

* Aussie, loonie give back gains as commodities rally loses steam

* ECB seen likely to ease, but investors ponder extent

By Lisa Twaronite and Ian Chua

TOKYO/SYDNEY, March 8 (Reuters) - The perennial safe-haven yen logged solid gains against the dollar and euro in Asian trade on Tuesday as risk appetites waned, and downbeat Chinese trade data fuelled concerns about the state of global demand.

China's February exports disappointed analysts' expectations, falling 25.4 percent from a year earlier, while imports fell by 13.8 percent. dollar skidded against the yen, giving up about 0.5 percent to 112.90 yen JPY= , after earlier hitting a one-week low of 112.75 yen. The euro dropped about 0.4 percent to 124.47 yen EURJPY=R .

"The dollar/yen is a bit soggy today," said Kaneo Ogino, director at foreign exchange research firm Global-info Co in Tokyo. "There are still plenty of people who want to sell the dollar, and lock in their recent gains."

Data released early in the session showed Japan's economy contracted an annualised 1.1 percent in the final quarter of 2015, less than the initially estimated 1.4 percent contraction, though private consumption remained weak. Australian and Canadian dollars pulled away from multi-month highs touched on a rally in commodity prices, which faded as investors took profits.

The Aussie fell about 0.5 percent to $0.7427 AUD=D4 after reaching an overnight high not seen since July, of $0.7486. Its Canadian peer climbed as far as C$1.3262 per USD CAD=D4 , scaling a peak last seen in November, but the greenback was last up 0.3 percent at C$1.3323.

On Monday, Brent crude LCOc1 jumped more than 5 percent to above $40 a barrel for the first time this year on growing hopes of a production freeze in an over-supplied market, though it was down more than 1 percent in Asian trading. euro edged up about 0.1 percent to $1.10220 EUR= , holding steady after a recent recovery from a one-month low of $1.08255 struck on March 2.

The euro's outlook remained clouded by Thursday's policy review by the European Central Bank (ECB).

The ECB is widely expected to ease, but investors are uncertain about how far the central bank will go. Euro bears are cautious about positioning for bold action, having been badly burnt before when the ECB disappointed by choosing to take more modest easing steps.

"We think the central bank will once again struggle to beat high expectations, with the euro not likely to suffer significantly after the announcement," analysts at BNP Paribas (PA:BNPP) wrote in a note to clients.

The Bank of Canada and Reserve Bank of New Zealand also hold policy meetings this week, but no action is expected.

Markets are giving only a small chance of a rate cut by the RBNZ. Many analysts instead expect a dovish statement to accompany a no-change decision. kept the kiwi from joining the overnight rally in commodity currencies. It was last at $0.6772 NZD=D4 , down about 0.4 percent and moving away from a two-month high of $0.6820 on Friday. (Editing by Richard Pullin and Richard Borsuk)

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