TOKYO: Dollar jumped 1 week high against the yen on Tuesday as China growth data was not as bad as a lot of experts feared, whereas the euro stayed under pressure ahead of possible easing steps by the European Central Bank as early as this week.
China’s economic growth held steady at 7.3 percent in the fourth quarter, slightly better than expected. But growth still hovered around its weakest levels since the global financial crisis, keeping pressure on policymakers to head off a sharper slowdown.
“It’s pretty clear, given the monthly activity data and broad trends elsewhere, that China growth is slowing, and will slow considerably in the absence of more easing from the monetary authorities,” said Sue Trinh, senior currency strategist at RBC Capital Markets in Hong Kong.
Against the yen, the greenback added about 0.6 percent to 118.20 after touching a one-week high of 118.32. The less downbeat-than-expected China figures prompted some investors to cover short positions after Monday’s U.S. holiday, market participants said.
U.S. markets were closed on Monday for a day in honour of Martin Luther King.
The China data prompted what Trinh called a “knee-jerk” reaction in the Australian dollar. That country’s massive trade exposure to China makes it proxy for China plays, and the Aussie rose as high as $0.8214 against its U.S. counterpart. It was last down about 0.5 percent on the day at $0.8174.
The euro was trading at $1.1582, down 0.2 percent on the day and not far from Friday’s nadir of $1.14595, its lowest level in 11 years, ahead of Thursday’s ECB meeting.
Sources have told Reuters the ECB may adopt a hybrid approach that would include buying debt and sharing some of the risk across the euro zone, while national central banks make separate purchases of their own. The programme might be limited in size to 500 billion euros ($579.95 billion).
“We expect the ECB to announce the expansion of its asset purchase program to include European government bonds at its 22 January meeting and we recommend staying short EUR/USD as well as short EUR/GBP into the meeting,” strategists at Barclays said in a note to clients.
Greece’s snap election on Sunday, with the anti-bailout party Syriza leading in the polls, also added to euro zone uncertainty and to pressure on the European unit.
The euro dropped last week after the Swiss National Bank stunned foreign exchange markets by abandoning its three-year-old pledge to cap its currency.
The Bank of Japan began a regular two-day policy meeting on Tuesday. The central bank is set to cut its core consumer inflation forecast for next fiscal year to below 1.5 percent from the 1.7 percent it projected in October, sources familiar with the BOJ’s thinking said.
TOKYO: Dollar jumped 1 week high against the yen on Tuesday following China growth data was not as bad as a lot of feared, whereas the euro stayed under pressure ahead of possible easing steps by the European Central Bank as early as this week.
China’s economic growth held steady at 7.3 percent in the fourth quarter, slightly better than expected. But growth still hovered around its weakest levels since the global financial crisis, keeping pressure on policymakers to head off a sharper slowdown.
“It’s pretty clear, given the monthly activity data and broad trends elsewhere, that China growth is slowing, and will slow considerably in the absence of more easing from the monetary authorities,” said Sue Trinh, senior currency strategist at RBC Capital Markets in Hong Kong.
Against the yen, the greenback added about 0.6 percent to 118.20 after touching a one-week high of 118.32. The less downbeat-than-expected China figures prompted some investors to cover short positions after Monday’s U.S. holiday, market participants said.
U.S. markets were closed on Monday for a day in honour of Martin Luther King.
The China data prompted what Trinh called a “knee-jerk” reaction in the Australian dollar. That country’s massive trade exposure to China makes it proxy for China plays, and the Aussie rose as high as $0.8214 against its U.S. counterpart. It was last down about 0.5 percent on the day at $0.8174.
The euro was trading at $1.1582, down 0.2 percent on the day and not far from Friday’s nadir of $1.14595, its lowest level in 11 years, ahead of Thursday’s ECB meeting.
Sources have told Reuters the ECB may adopt a hybrid approach that would include buying debt and sharing some of the risk across the euro zone, while national central banks make separate purchases of their own. The programme might be limited in size to 500 billion euros ($579.95 billion).
“We expect the ECB to announce the expansion of its asset purchase program to include European government bonds at its 22 January meeting and we recommend staying short EUR/USD as well as short EUR/GBP into the meeting,” strategists at Barclays said in a note to clients.
Greece’s snap election on Sunday, with the anti-bailout party Syriza leading in the polls, also added to euro zone uncertainty and to pressure on the European unit.
The euro dropped last week after the Swiss National Bank stunned foreign exchange markets by abandoning its three-year-old pledge to cap its currency.
The Bank of Japan began a regular two-day policy meeting on Tuesday. The central bank is set to cut its core consumer inflation forecast for next fiscal year to below 1.5 percent from the 1.7 percent it projected in October, sources familiar with the BOJ’s thinking said.
