Slowing economic data out of China is weighing on high beta currencies, and helping support the Japanese yen against its European counterparts. Even with weakness expected moving forward, the yen is showing resilience right now.
The latest CPI data out of China indicates that the economy is expanding at a slower pace than expected. The result is a bit of a disappointment, and a return to risk aversion on the news. With risk aversion a reality, currencies like the yen are showing some strength. Yen is gaining against the euro and the pound today, even though it is down against the US dollar.
How long the yen will retain some of this strength is another issue, though. The Bank of Japan is preparing to embark on a very aggressive easing program, and that is expected to weaken the yen in the future. Even with the easing, though, yen is still considered a fairly “safe” currency, and is often preferred when risk aversion sends high beta currencies like the pound and the euro lower.
For now, the global economy is the focus, and that means a stronger yen.
At 16:43 GMT USD/JPY is up to 99.3515 from the open at 99.2350. EUR/JPY is down to 129.2750 from the open at 129.6650. GBP/JPY is down to 151.6750 from the open at 151.7355.
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