Forex Flash: China economic rebound optimism weighs upon yen – BTMU
FXstreet.com (Barcelona) - Yen weakened overnight in reflection of its easing as a safe haven currency as investor optimism that the economic slowdown in China appears to be gradually returning grows.
Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ notes that both the official and the HSBC manufacturing PMI surveys for October revealed a pick up in business confidence rising to 50.2 and 49.5 respectively. He feels that "the increase in the official manufacturing PMI was driven mainly by output which increased to 52.1 in October."
New export orders also improved more modestly to 49.3 in October but remained below the 50 level, highlighting the continuing weakness in domestic demand. Hardman feels that the survey should "help reinforce investor confidence that the Chinese economy likely bottomed in Q3, although the pace of growth still remains relatively slow requiring continued stimulative policy."
He notes the gradually improving growth outlook in Asia which has encouraged a pick up in capital flows following the Fed's QE3 announcement in September. Consequentially, Asian currencies have outperformed over the last couple of months while most other currencies have failed to strengthen against the USD.
Hardman feels that the easing of safe haven demand for the Yen was again evident in the latest weekly securities transactions report from the MoF which revealed the third consecutive week of net selling of Japanese money market securities by foreign investors. He finishes by highlighting that "Negative sentiment towards the yen in the near-term has also been supported by the announcement overnight by Moody's that the deficit bill impasse in credit negative for Japan given the risk that it may force the cancellation of a bond auction."
Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ notes that both the official and the HSBC manufacturing PMI surveys for October revealed a pick up in business confidence rising to 50.2 and 49.5 respectively. He feels that "the increase in the official manufacturing PMI was driven mainly by output which increased to 52.1 in October."
New export orders also improved more modestly to 49.3 in October but remained below the 50 level, highlighting the continuing weakness in domestic demand. Hardman feels that the survey should "help reinforce investor confidence that the Chinese economy likely bottomed in Q3, although the pace of growth still remains relatively slow requiring continued stimulative policy."
He notes the gradually improving growth outlook in Asia which has encouraged a pick up in capital flows following the Fed's QE3 announcement in September. Consequentially, Asian currencies have outperformed over the last couple of months while most other currencies have failed to strengthen against the USD.
Hardman feels that the easing of safe haven demand for the Yen was again evident in the latest weekly securities transactions report from the MoF which revealed the third consecutive week of net selling of Japanese money market securities by foreign investors. He finishes by highlighting that "Negative sentiment towards the yen in the near-term has also been supported by the announcement overnight by Moody's that the deficit bill impasse in credit negative for Japan given the risk that it may force the cancellation of a bond auction."
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