Yen Off Selling Spree As China Q1 GDP Disappoints
April 13 2012 - 01:21AM
RTTF2
The Japanese yen that underperformed in early Asian trading on
Friday on the back of a rally in Asia-pacific stocks erased some of
its losses in late trading after a report showed that the pace of
Chinese economic growth in the first quarter slowed to its lowest
level in nearly 3-years.
China's gross domestic product expanded 8.1 percent year-on-year
in the first three months of 2012, slower than the fourth quarter's
8.9 percent increase. Economists were looking for a growth slowdown
to 8.4 percent.
Separately, the statistical office reported that the industrial
production grew 11.9 percent year-on-year in March, compared with
expectations for a 11.5 percent expansion.
Retail sales increased 15.2 percent annually in March while
expectations were for a 14.8 percent rise.
The members of the Bank of Japan's monetary policy board felt
that the expansions in their asset purchase program had a positive
effect on the financial markets, minutes from the bank's meeting on
March 12 and 13 revealed today.
The minutes also noted that some members believe CPI to be
heading for a mild upward trend and away from deflation.
At the meeting, the BoJ decided to expand its loan scheme aimed
at supporting economic growth by JPY 2 trillion. At the same time,
the central bank kept its monetary policy unchanged. The measure
was largely aimed at tackling deflation and establishing a new
basis for economic growth.
Asian markets are mostly trading notably higher with investors
indulging in some hectic buying, tracking a positive lead from Wall
Street, where stocks posted strong gains overnight on encouraging
trade data. Hopes of continuation of U.S. earnings momentum too
contributed to the positive start.
However, some of the markets in the region are trading off their
highs following a slower than expected GDP growth in China. Thus
far, Japan's Nikkei average was up 1.25 percent, Australia's
S&P/ASX rose 0.76 percent, Taiwan's TWII climbed 1.54 percent,
South Korea's KOSPI jumped 0.65 percent and China's Shangai
composite index rose to 0.18 percent.
Overnight economic data from the U.S. was mixed, with the trade
deficit narrowing to $46.0 billion in February from $52.5 billion
in January, initial jobless claims rising to 380,000 in the week
ended April 7 from the previous week's revised figure of 367,000
and the producer price index being unchanged in March following a
0.4 percent increase in February.
The yen that fell to a 1-week low of 84.84 against the
Australian dollar and 67.52 against the New Zealand dollar snapped
back to 84.18 and 67.09, respectively as risk-off sentiment
generated following the disappointing China data.
The yen reached 3-day lows against the rest of majors in early
Asian trading but the bear run was checked by investors concern
that the red dragon economy is struggling to escape from
slowdown.
The yen is presently trading near 81.0 against the dollar and
129.10 against the pound, up from previous lows of 81.21 and
129.61, respectively.
The Japanese currency also rebounded to 81.28 against the
Canadian dollar from pre-China GDP high of 81.69. The yen inched
higher to 106.64 against the euro and 88.77 versus the Swiss franc
from previously hit 3-day lows of 107.12 and 89.16,
respectively.
Looking ahead, German and Italian consumer price indexes and the
U.K. producer price inflation data- all for March are expected in
the upcoming European session.
The U.S. inflation report for March and the University of
Michigan's consumer confidence survey results for April are
expected to garner market attention in the New York session.
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