Chinese Industrial Outlook Decline Pushes Yen Up

Several negative numbers in China today brought worldwide investors to purchase yen-priced assets as pessimism and confusion regarding the global economic situation have returned to financial markets, favoring the safe profile of the Japanese currency.

The yen gained versus most of the 16 main traded currencies today after reports in China posted a worse-than-expected rise for the national industrial output also indicating negative exports and new loans numbers, raising risk aversion among traders this Tuesday. The South Korean won was one of the biggest losers versus the yen as the Asian nation’s central bank affirmed that it will maintain an accommodating monetary policy, damping demand for the won. The Australian and the New Zealand dollar also posted sharp falls versus the yen as stocks markets went down worldwide, which is negative for commodity-linked currencies like the Aussie and the kiwi.

Analysts suggest that the falling Chinese lending numbers will make it harder for equity markets to be sustained at high levels, and the yen benefits from this negative scenario in stock exchanges around the world. Volatility still remains extremely high as levels of risk appetite and risk aversion are changing overnight during the past few weeks, now, with a renewed risk aversion, investors are choosing the yen to invest.

EUR/JPY traded at 136.68 as of 11:41 GMT from a previous rate of 137.94 yesterday. AUD/JPY followed, being traded at 80.51 from 81.75.

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