FXstreet.com (Barcelona) - Asian Markets have shifted direction on Thursday after two consecutive days with gains, as Chinese and Japanese economies sent signals of stagnation; pessimism ahs taken hold on investors and The USD and, the yen, have been favoured by renewed risk aversion.
The Yen has posted gains across the board soaring about 300 pips against the Dollar and rallying on a strong pace against Pound and Euro.
According to the Saxo Bank strategy team, the Yen has been seen as a safe currency again among investors despite gloomy Japanese data: Yen and US Dollar strengthening as demand for 'safe haven' currencies increases as Asia equities decline. Broad gains by the US dollar against a wide range of currencies increased after Japan GDP figures that showed Japan declining at the fastest pace since 1974. Equity markets dipped again in Asia, led by China Shanghai Iindex -2.34% and Nikkei -2.08%. Overall Japan data was definitely bearish, pushing investors to reduce risk aversion, moving into buying of the yen as well as the dollar.
Furthermore, the Saxo Bank strategy tean expects this terend to extend during the rest of the day: WSJ said TALF remains bogged down by administrative wording of the contracts involved and Chinese exports fell by a record 25.7% in Feb but yet markets managed to rally. More importantly, Congress is looking at the Marked-to-Market issue and that will be in focus regarding risk aversion trades and continuing to support JPY and USD rally.