TOKYO: The yen touched two-week high against the dollar on Monday, while commodity currencies were weak as concerns about the health of the Chinese economy added to unease following a fall on Wall Street.
The dollar slid to a two-week low of 116.64 yen in early trade, its lowest since Jan. 16, down from around 117.52 late in New York on Friday.
Dollar buying by Japanese importers helped the exchange rate back to 117.74 yen, but analysts say the dollar looks vulnerable after data showed on Friday the US economy slowed in the fourth quarter, driving Treasury yields to new lows.
“Now that US GDP growth has come lower than expected, markets are paying more attention to other US data, to be released in the coming days,” said Kengo Suzuki, chief forex strategist at Mizuho Securities.
Among key numbers, US ISM non-manufacturing data will be out on Monday and Friday’s non-farm payrolls report is due on Friday.
“There is a broad consensus that the US economy is the only bright spot for global growth. If headline numbers are weaker than expected, markets tend to react more,” said Minori Uchida, head of Tokyo Global Market Research at the Bank of Tokyo-Mitsubishi UFJ.
The yen was also helped by investor’s truning more risk averse after an official survey on Sunday showed activity in China’s factory sector unexpectedly shrank for the first time in nearly 2-1/2 years in January.
A separate survey, the HSBC/Market Purchasing Managers’ Index (PMI), showed on Monday that activity in China’s factory sector shrank for a second month in January, helping to cap commodity currencies.
The euro also reached a one-week trough of 132.00 yen before bouncing back to 133.16, while the Australian dollar plumbed an 11-month low of 90.25 yen before steadying around 91.50.
