Major currencies tread water ahead of euro zone, China data

Major currencies tread water ahead of euro zone, China data

TOKYO,. Major currencies remained confined to well-trodden ranges today, as markets look next to European and Chinese data for more evidence that the worst may be over for the global economy.

The yen remained close to 2019 lows against the US and Australian dollars after investors reduced exposure to the safe-haven currency to seek higher yields elsewhere.

The Japanese currency has fallen against both units after rising to recent highs in late March, said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.

“That’s probably because the market’s concern about the global economy is easing and also the US-China trade war will not intensify further,” he said.

The dollar was unchanged at ¥112.00, holding above its 200-day moving average for the fourth straight session.

It traded less than a sixth of a per cent off the year’s high of ¥112.135 hit in early March.

The Aussie was basically flat at ¥80.35, also trading above its 200-day moving average, for the third session, after last breaching the key technical level in December last year.

The data in focus includes Germany’s ZEW economic index for April, due around 0900 GMT, and China’s gross domestic product set for tomorrow, which is expected to offer more insight on the health of the world’s second-largest economy. Chinese exports and credit data last week signalled some stabilisation, prompting markets to adjust their outlook on global growth.

Market participants eyed European manufacturing data due on Thursday for cues on whether growth in that region is improving.

The euro was steady at US$1.1307 after inching up less than a tenth of a per cent overnight.

The dollar index last stood at 96.932 after ending the previous session basically unchanged.

Investors also kept their focus on trade issues, including talks between Japanese Economy Minister Toshimitsu Motegi and US Trade Representative Robert Lighthizer.

Motegi said late yesterday both sides had confirmed that new bilateral trade talks would proceed based on the two nations’ joint statement issued last September. Motegi and Lighthizer are slated to continue their talks today.

Meanwhile, US Treasury Secretary Steven Mnuchin said over the weekend he hoped Sino-US trade negotiations were close to their final round.

Reuters reported on Sunday that US negotiators had tempered demands that China curb industrial subsidies as a condition for a trade deal after strong resistance from Beijing.

The Australian dollar, a barometer of investor sentiment, was unchanged at US$0.7174, hovering close to a near seven-week high brushed on Friday.

Mizuho’s Yamamoto said traders were unwinding bets on two interest rate cuts in 2019 by Australia’s central bank to counter the country’s slowing economic growth.

“The unwinding of that expectation is happening now. That’s why it’s supporting the Australian dollar,” he said. — Reuters