Yen Climbs As Sentiment Fades On Fed, China Worries

23:55, 30th August 2015

(RTTNews) - The Japanese yen gained ground against its major rivals on Monday, as lingering worries over China's growth and the prospects of a rate increase by the Federal Reserve raised the demand for safe-haven assets.

China will release tomorrow official PMI for August and investors wait to see if the world's second largest economy is heading for a hard landing.

At the annual gathering in Jackson Hole, Wyoming, the Fed officials left the door open for an interest rate hike in September, despite the recent turmoil in global markets.

In an interview with CNBC, Federal Reserve Vice Chairman Stanley Fischer said Friday that it was too early to tell if the Fed will raise interest rates in September, but noted that the central bank is heading in the direction of raising rates. Contraction in Japan's industrial output in July, also dampened risk sentiment.

Data from the Ministry of Economy, Trade and Industry showed that industrial production in Japan fell a seasonally adjusted 0.6 percent on month in July.

That missed expectations for an increase of 0.1 percent following the 1.1 percent increase in June.

The currency showed mixed performance on Friday. While the yen held steady against the euro and the pound, it declined against the greenback and the franc.

The yen climbed to 120.88 against the greenback, 186.49 against the pound and 125.93 against the franc, reversing from an early low of 121.70, 5-day lows of 187.49 and 126.53, respectively. The yen is likely to challenge resistance around 119.00 against the greenback, 185.00 against the pound and 124.00 against the franc.

The yen hit a 4-day high of 135.86 against the euro, coming off from its prior 4-day low of 136.35. At Friday's close, the pair was valued at 136.14. On the upside, the yen is likely to find resistance around the 134.00 level.

The yen firmed to a 4-day high of 91.30 against the loonie, off its previous 4-day low of 92.06. Further gains may take the yen to a resistance around the 89.5 mark.

The Japanese yen reached as high as 86.34 against the aussie, and held steady thereafter. This may be compared to an early low of 87.29. The yen is seen finding resistance around the 84.00 area.

Looking ahead, Eurozone flash consumer sentiment index for August is due shortly.

At 9:45 am ET, Chicago PMI for August is to be published.